International Trade in Macedonia

News Related to International Trade in Macedonia

Business outline for Macedonia

Main Industry Sectors

Macedonia has, in its majority, an agricultural economy.  The agricultural sector represents 12% of its GDP and employs 20% of its active population. It mainly produces rice, cotton, tobacco and fruits. Sheep and goat breeding is equally important. There are a few deposits of iron, copper and lead in the country.

The industrial sector includes chemical products, steel, machinery and textiles. The textile sector constitutes the main industry of the country, notably the leather industry.  Both, the manufacturing and the mining sectors contribute about 30% to the GDP.

The tertiary sector represents about 60% of the GDP and employs 50% of the active population. The main income sources come from transport, telecommunications and energy production.

Economic Overview

Macedonia is the poorest of the former Yugoslavian republics and it was not spared from the global economic crisis. Many companies have closed their doors or have reduced their number of employees, while the country lacks liquid assets. The diaspora has reduced its financial transfers into the country, and the citizens have been withdrawing their savings in Denars (MKD) fearing the devaluation of their national currency.  In 2009, the country entered into a period of recession:  drop in production and exports, budgetary deficit explosion, scarcity of FDI, etc.

The industrial infrastructures inherited from Yugoslavia have profited of very few investments. Even though the country has a skilled and competitive labor force, job opportunities are insufficient. The official unemployment rate is more than 35%. Inflation, which was under control during the last few years, has remained at a rate higher than 8% in 2008. Macedonia has a consistent unofficial economy which represents about 35% of its GDP.

The central bank estimates that the country should start its economic revival in 2011, with a growth of around 3% and a steady inflation rate of 3%.

FDI in Figures

Foreign direct investment in Macedonia is estimated at about USD 600 million. The main foreign investing country is Austria followed by Hungary, Greece and Cyprus. Investments from the countries that were formerly part of Yugoslavia are small in relation to their commercial presence in the country.

Globally, FDI is weak in Macedonia compared to its neighboring countries. Nevertheless, the share of FDI has increased in 2009 and 2010, but it would be convenient to the country to consolidate its image at an international level if it hopes to attract more FDI.

FDI Government Measures

The country's government has issued laws that provide to foreign investors the same rights as to the national ones. Macedonia proposes to investors a free trade zone for purchasing and selling merchandises, a tax deduction on profits for three years, subsidies for job creation, fast procedures to  private property access, etc.

Country Strong Points

The country has great advantages: 
- Salaries are low and there is high-quality workmanship;
- The country has a stable democracy;
- The procedures to create an enterprise are fast and uncomplicated;
- Geographically, the country enjoys an excellent location, it is a meeting point connecting the roads of Europe;
- The country's government has put in place several reforms in order to attract foreign investors.

Country Weak Points

Due to the economic crisis, the growth rate is very low (negative in 2009) and the inflation is strong: 8% in 2008. In addition, the country is again facing corruption and it has a significant foreign debt.

Foreign Trade Overview

Macedonia is an open economy, highly integrated into the international trade, with a total trade-to-GDP ratio of 107%. It became a member of WTO (World Trade Organization) in April 2003. Following a cooperation agreement with the EU, Macedonia signed a Stabilization and Association Agreement in April 2001, which concedes Macedonia duty-free access to European markets. Macedonia's top three export partners are: Serbia-Montenegro, Germany and Greece. Macedonia mainly exports clothing, textiles, iron, steel, footwear and tobacco. Its top three suppliers are: Germany, Greece and Russia. It mainly imports hydrocarbons, iron and steel, machinery, and food products.

Due to the effects of the crisis, the country's trade deficit became deeper.  As a matter of fact, the money transfers from the Macedonians living abroad partly financed this imbalance since these transfers were greatly reduced due to the economic situation.