Macedonia legal system
Macedonia is a multiparty republic with a Parliament elected every four years. The President is the head of state. Since 1945 Macedonia had been a sovereign republic within Federal Yugoslavia and on September 8, 1991, following a referendum of its citizens, Macedonia was proclaimed a sovereign and independent state.
Macedonia has a strong chance to be ready to join NATO in 2008 together with Croatia and Albania. In December 2005, the European Commission recognised the progress that Macedonia has made in meeting the Copenhagen criteria and recommended granting Macedonia candidate country status for membership to the EU. It is expected that the accession negotiations will begin in 2008. With an eye to possible membership to the EU, the new government, elected last summer has undertaken extensive reforms of the judicial system, public administration and the overall economy.
Economy in Macedonia in 2007
At independence in September 1991, Macedonia was the least developed of the Yugoslav republics, producing a mere 5% of the total federal output of goods and services. Exacerbated by the UN sanctions imposed on the downsized Yugoslavia, one of its largest markets, and a Greek economic embargo over a dispute about the country's constitutional name and flag, the lack of economic growth continued until 1996, when growth started to pick up and this trend continued until 2001 when the economy suddenly shrank 4.5% because of civil unrest caused by Albanian insurgents. Growth recovered in 2002 and since then, Macedonia has had a stable GDP growth rate of around 4%, a low inflation rate of 2-3% on average, fiscal discipline which has been confirmed by international financial institutions and a well-functioning coordination between fiscal and monetary policy.
Closer relations between Macedonia and the European Union, as well as the strong commitment of the Government to implement necessary structural reforms, are expected to give an impetus to economic growth in the medium-run, forecasted at 6-8%. From the production side, the main contributors to this projected growth will be industry and services, whereas on the expenditure side, growth will be driven by exports and investments. Fiscal policy in the following period will remain disciplinary with a general government budget deficit of around 1% of GDP, contributing to a further reduction of interest rates and trade deficit. Maintained macroeconomic stability together with intensified structural reforms in the medium term will contribute to an annual average employment increase of around 4% along with a productivity growth of 2.5%.
The current Standard & Poor’s foreign currency rating is BB+ and the outlook is stable. Fitch’s Long Term Issuer Default rating was upgraded in 2006 to BB+ with the Country Ceiling rating to BBB- .
Foreign investment
Compared to the region, FDI inflow in Macedonia has been relatively low. With only 39 EUR FDI per capita in 2005, Macedonia hit the bottom of the list of the CEE countries. The total accumulated amount of investments until the end of 2005 in Macedonia was slightly over EUR 1 billion. In 2006, the FDI inflow in the country was around EUR 350m. The main source of these investments was the privatization of state enterprises sold in international auctions and a few greenfield investments. The biggest foreign investments in Macedonia were located in the telecommunication sector, the energy sector, the refinery industry, cement production, the steel industry and mining. Among the biggest investors are companies such as: Matav, Johnson Controls, EVN, Titan, Hellenic Petroleum and others. The sectors that are considered to have big potential for attractin FDI include: finished textile and leather goods; shoe production; fruit and vegetable growing; lamb meat; processed food and packaging; wines; tobacco and cigarettes; tourism; steel and metal fabrication; chemical and pharmaceutical industry; vehicle and bus assembly; electrical equipment and electric motors; construction; infrastructure; banking; telecommunications and other service activities.
Industry and natural resources
The main Macedonian industries are: food industry, chemical industry, metallurgy and metal industry, natural resources processing, textile industry and pharmaceutical industry. After the conflict in 2001, the Macedonian industry has been growing with a good pace and that reached a 6.8% growth rate in 2005. Industrial production generates around 30% of Macedonian GDP. The main natural resources are low-grade iron ore, copper, lead, zinc, coal, chromites, manganese, nickel, tungsten, gold, silver, marble, travertine and other decorative stones, asbestos, gypsum, timber, and hydropower.
Macedonian unemployment
According to many experts, it is considered the biggest problem of the Macedonian economy. The official unemployment rate of the country by ILO standards is 36.2%, which is a record high in the region. Due to the presence of the grey economy in the country, it is believed that the real percentage is slightly lower than the official i.e. between 25-30%, but still, it is on a very high level and without a tendency of dropping down significantly.
Agriculture in Macedonia
The agribusiness sector (including agriculture and processing) is of great significance for the economy, accounting for roughly 10% of the GDP, and the primary agriculture sector remains a major employer, accounting for an estimated 24% of the total working population by employing approximately 145,000 persons. The climate conditions are excellent for grapes, tobacco, early market garden vegetables, fruits, and livestock breeding.
Infrastructure
The communication system in Macedonia is well developed and on the country's territory there is a road network of 9,205 km in length for road transport services, and a railway network consisting of over 900 km. The telephony system is extensive and modern as well. More than two-thirds of the lines are residential; however telephone service is also available in most villages. There were 1.417 million (2006) mobile phone users and around 490,900 (2006) main lines in use. Internet usage is still at a low level, despite the fact that in 2006 Macedonia became the first wireless (Wi-fi) country in the world. According to the latest survey data, around 35% of the population uses the Internet on a daily basis.
Area: 25,713 sq km
Population: 2.1 million
Capital city: Skopje
Language: Macedonian, Albanian
Ethnic groups: Macedonians (64.18%), Albanians (25.17%), Turks (3.85%), Roma (2.66%), Serbs (1.78%), and others.
Land boundaries: Serbia to the north, Bulgaria to the east, Greece to the south and Albania to the west
MACRO DATA
GDP (real growth): 3.2% (2006) in Q1 2007 7%
GDP (PPP): USD 16,96 million
GDP per capita: € 2,400
Inflation: 3.2% ,
Unemployment: 35% (The actual unemployment rate is estimated around 20-25%)
Export: $2.341 billion f.o.b.
Import: $3.631 billion f.o.b..
*2006 est. source: CIA, Makinvest
USEFUL DATA
Currency: Macedonian Denar (MKD)
Exchange rate MKD / € 61.3
Time zone: GMT +1
Area code: +389
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