After 2012 individual construction will no longer be the largest segment of the residential construction sector in Poland.
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"From the beginning of the project, PMR was a professional partner who listened to our needs and catered their proposals according to our needs, their strengths and our budgetary constraints. [...]"
Director of Sourcing, Global marketer of consumer and commercial products
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We are a member of the Strategic and Competitive Intelligence Professionals (SCIP)
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We are a member of the European Association of Opinion and Marketing Research Professionals ESOMAR.
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| Why to enter this market? |
- EU candidate state
- Increasing stability
- Low inflation
- Well-educated and skilled workforce
- Geographical location and well-developed infrastructure
- One of the lowest tax rates in Europe – 10% for both corporate profits and personal revenues
- Relaxed legal requirements
- Large labour force
- Relatively low employment costs
- Social contributions cut in 2009
- Increase in public investment projects from 3% to 6% of GDP
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Business and economic environment
At the time of its 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. The lack of economic growth, exacerbated by the UN sanctions imposed on the reduced Yugoslavia, one of its largest markets, and a Greek economic embargo after a dispute over the country’s constitutional name and flag, continued until 1996, when growth started to pick up. This trend continued until 2001, when the economy suddenly shrank because of civil unrest caused by Albanian insurgents. However, the closer relationship between Macedonia and the European Union, along with the strong commitment of the government to implement essential structural reforms, has given an impetus to economic growth in recent years. The average GDP growth rate between 2004 and 2008 was 4.6% per annum (in contrast to only 1.55% between 2000 and 2004). However, the country was not immune to the global economic problems, and in 2009 the economy shrank by 0.9%, only to rebound with 1.2% growth a year later. Projections for the next few years suggest even stronger growth. With regard to production, the main contributors to growth are industry and services, whereas in terms of expenditure, change is driven by exports, along with domestic consumption and investments.
The business environment in Macedonia is favourable in terms of tax. Macedonia has a relatively low general tax rate – 10%. In comparison with the overall region, FDI inflow in Macedonia has been relatively low. With per capita FDI of only 39 EUR in 2005, the country was at the bottom of the list of the CEE countries. The total accumulated amount invested in Macedonia by the end of 2005 was slightly more than EUR 1 bn. However, higher levels of FDI were injected into the Macedonian economy in the last few years. FDI inflow was around EUR 350 m in 2006. It increased to EUR 500 m in 2007 and EUR 418 m in 2008, but there was another reduction to EUR 176 m in 2009, the year of the economic recession. The main sources of these investments have been the privatisation of state enterprises sold at international auctions and a few greenfield investments.
The most substantial foreign investments in Macedonia were those in the telecommunication industry, the energy industry, the oil industry, cement production, the steel industry and mining. Those investing the most substantial amounts include: Matav, Johnson Controls, EVN, Titan and Hellenic Petroleum. The areas of the economy which are considered to have considerable potential for attracting FDI include: finished textiles and leather goods; shoe production; fruit and vegetable growing; lamb; processed food and packaging; wines; tobacco and cigarettes; tourism; steel and metal fabrication; the chemical and pharmaceutical industry; car and bus assembly; electrical equipment and electric motors, construction, infrastructure, banking, telecommunications and other services.
The inflation rate in Republic of Macedonia declined substantially from 350% in 1993 to 2.3% in 2007 but faced increase again with 8.3% reached in 2008. In 2009 there was deflation (a -0.8% inflation rate), and the following year the rate remained low, at 1.5%. According to many experts, unemployment is the most serious problem facing the Macedonian economy. The official unemployment rate of the country by ILO standards was 31.7% in 2010. Because of the grey economy in the country, it is believed that the real percentage is slightly lower than the official figure, between 25-30%, but it is, nevertheless, at a very high level and does not appear to be falling significantly.
Imports reached EUR 3.7bn in 2010, whereas exports were worth EUR 2.3bn. Both grew annually by 5.6% and 1.8% respectively, but the result was a negative trade balance.
Infrastructure and technological environment
The transportation system in Macedonia consists of a 13,736 km road network and a railway network more than 699 km long. The landline telecommunications system is extensive. More than two-thirds of the lines are residential; and a telephone service is also available in most villages. There were 1,943,000 mobile phone users and around 442,200 landlines in use in 2009. Internet usage equals that in the rest of the region, with over 1.057 m users and 60,000 internet hosts in 2009.
Social environment
The population of the Republic of Macedonia is 2.07 million, and the current ethnic structure of its society is stable. The majority (64.18%) are ethnic Macedonians, and this is followed by the largest minority, Albanians (25.17%). Other ethnic groups in the country include Turks, Roma and Serbs. The official language is Macedonian.
The Macedonian education system consists of pre-school education, primary education, secondary education and higher education. There are four state universities: the Ss. Cyril and Methodius University of Skopje, the St. Clement of Ohrid University of Bitola, the State University of Tetovo and the Goce Delchev University of Shtip. There are also a number of private university institutions. Interestingly, the United States Agency for International Development introduced a project called “Macedonia Connects”, which made Macedonia the first all-broadband wireless country in the world. According to the Ministry of Education and Science, there are 461 schools (both primary and secondary) with access to the internet.
Political environment
Macedonia had, since 1945, been a republic within the federation of Yugoslavia and on September 8, 1991, after a referendum, it was proclaimed a sovereign and independent state. The Republic of Macedonia is a parliamentary democracy with an executive government composed of a coalition of parties from the single chamber legislature and an independent judicial branch with a constitutional court. The Assembly consists of 120 seats, and there are elections every four years. The role of the President of the Republic is mostly ceremonial, with the real power resting in the hands of the President. The President of the Republic is elected every five years and cannot be elected more than twice. The current President is Gjorge Ivanov.
The country is a member of the World Trade Organisation (WTO) and the Organisation for Security and Cooperation in Europe. It is a candidate for NATO and the European Union organisations. The Republic is divided administratively into 8 regions and 83 municipalities.
General data
Area: 25,713 sq km
Population: 2.07m (2010)
Capital: Skopje
Language: Macedonian
National boundaries: Serbia and Kosovo to the north, Albania to the nest, Greece to the south and Bulgaria to the east
Ethnic groups : Macedonians (64.18%), Albanians (25.17%), Turks (3.85%), Roma (2.66%), Serbs (1.78%) and others
Major economic indicators
| |
2007 |
2008 |
2009 |
2010 |
2011f |
| GDP (EUR bn) |
5.77 |
6.62 |
6.7 |
6.78 |
7.01 |
| Population (m) |
2.05 |
2.06 |
2.05 |
2.07 |
2.077 |
| GDP per capita (EUR) |
2816 |
3212 |
3170 |
3216 |
3317 |
| GDP (constant prices y-o-y %) |
6.1 |
5.0 |
-0.9 |
1.2 |
3.5 |
| Exports, % of GDP |
40.9 |
40 |
28.8 |
34.6 |
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| Imports, % of GDP |
60.6 |
66.1 |
52 |
56.3 |
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| CPI (average, y-o-y %) |
2.3 |
8.3 |
-0.8 |
1.5 |
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| Central bank reference rate |
9.9 |
9.8 |
9.3 |
8.2 |
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| Monthly wage, nominal (EUR) |
414 |
490 |
365 |
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| Unemployment rate (%) |
34.9 |
33.0 |
32.2 |
31,7 |
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| Net FDI (EUR bn) |
0.47 |
0.42 |
0.42 |
0.18 |
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| FDI % GDP |
8.1 |
6.3 |
6.2 |
2.6 |
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| FX reserves (EUR bn) |
1.52 |
1.52 |
1.59 |
1.59 |
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| Exchange rate to USD AVG |
44.72 |
41.86 |
45.38 |
46.57 |
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| Exchange rate to EUR AVG |
61.18 |
61.27 |
61.27 |
60.92 |
61.42 |
Last update: Q1 2011
Useful data
Currency: the Macedonian Denar (MKD)
Exchange rate: 1 MKD = 0.016 EUR (2011)
Time zone: CET, CEST
Area code: +389
If you would like to find out more on the Macedonian market opportunities please do not hesitate to contact us directly:
phone: (48 12) 292 22 50
faks (48 12) 292 22 99
e-mail: info@pmrconsulting.com
PMR Business Solutions in Macedonia
Market reports Macedonia
To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Macedonia.
If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs.
Consulting in Macedonia
PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
Market research in Macedonia
PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses.
Case studies for Macedonia
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