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In 2015, Mace­do­nia’s econ­omy is ex­pected to keep up its ro­bust growth pace of 3.8%, ac­cord­ing to fore­casts of the World Bank, the Euro­pean Bank for Re­con­struc­tion and Devel­op­ment, and the In­ter­na­tional Mon­e­tary Fund. Growth will be driven by govern­ment in­vest­ments in civil en­gi­neer­ing projects, as well as for­eign in­vest­ments in the man­u­fac­tur­ing industry, ris­ing ex­ports and higher do­mes­tic de­mand.

Mace­do­nia's gross do­mes­tic prod­uct (GDP) in­creased by 3.8% in 2014, above the av­er­age for South­east Europe (SEE), backed by grow­ing pri­vate con­sump­tion, strong in­dus­trial out­put, large-scale in­fra­struc­ture in­vest­ments, higher lend­ing ac­tiv­ity, ex­pand­ing ex­ports and big­ger for­eign di­rect in­vest­ments (FDI). How­ever, the coun­try's econ­omy con­tin­ues to suf­fer from high un­em­ploy­ment, es­pe­cially youth un­em­ploy­ment, de­fla­tion and large in­for­mal econ­omy.

In terms of busi­ness-en­hanc­ing reg­u­la­tions, Mace­do­nia man­aged to keep its lead­ing po­si­tion among the coun­tries in the SEE re­gion, ac­cord­ing to the World Bank's Do­ing Busi­ness 2015 re­port. Mace­do­nia oc­cu­pied the 30th place out of 189 coun­tries in the 2015 re­port, go­ing up one place in com­par­i­son to the pre­vi­ous year's edi­tion. Start­ing a busi­ness be­came eas­ier af­ter the govern­ment made on­line regis­tra­tion free of charge, strength­ened mi­nor­ity in­vestor pro­tec­tions, and made re­solv­ing in­sol­vency eas­ier, ac­cord­ing to the re­port.

Mace­do­nia also per­formed well in the Global Com­pet­i­tive­ness Re­port 2014-2015 pub­lished by the World Eco­nomic Fo­rum. The coun­try ranked 63rd among 144 economies, while in the pre­vi­ous year's re­port it ended up 73rd out of 148 coun­tries. The lead­ing is­sues lim­it­ing Mace­do­nia's com­pet­i­tive­ness are ac­cess to fi­nanc­ing, poor work ethic in na­tional labour force, and in­ad­e­quately ed­u­cated work­force, the re­port showed.

Mace­do­nian em­i­grants con­trib­uted 302.3 mil­lion euro in re­mit­tances to the coun­try in 2014, down by 2.5%, ac­cord­ing to the World Bank. Re­mit­tances ac­counted for more than 3.0% of Mace­do­nia's GDP in 2014. Re­mit­tances by Mace­do­nians liv­ing in the U.S., Ger­many, and Turkey made up 46.2% of the to­tal.

Fi­nal con­sump­tion, which con­trib­uted 86.4% to the GDP, in­creased in value by 1.6% in 2014. Gross cap­i­tal for­ma­tion went up by 13.0%, con­tribut­ing 26.8% to the GDP. Both im­ports and ex­ports jumped - by 14.5% and 17.0%, re­spec­tively. The coun­try's GDP to­talled 407.049 bil­lion denars in 2014.

The gross value added (GVA) gen­er­ated by the na­tional econ­omy in­creased by nom­i­nal 3.4% in 2014 and to­talled 348.069 bil­lion denars. The agri­cul­tural sec­tor reg­is­tered an an­nual

rise of 2.0%, but cut its share in the GVA to 9.1%, from 9.2%. The in­dus­trial sec­tor grew by 4.3% in terms of value and its share in the GVA struc­ture in­creased to 14.9% from 14.7%. Con­struc­tion ex­panded by 6.1%, thus slic­ing an 11.6% share in the coun­try's GVA. The ser­vices sec­tor recorded a 3.0% an­nual in­crease, adding up with a 64.5% share in the GVA.

In­dus­trial out­put went up by 4.8% in 2014, ac­cord­ing to the coun­try's sta­tis­tics in­sti­tute. The man­u­fac­tur­ing sec­tor rose by 9.0%, while the elec­tric­ity and gas sup­ply, and the min­ing sec­tors fell by 14.2% and 1.9%, re­spec­tively. Man­u­fac­ture of elec­tri­cal equip­ment was the seg­ment to re­port the high­est an­nual pro­duc­tion growth, of 30.1%, in 2014.

Mace­do­nia reg­is­tered an an­nual av­er­age de­fla­tion of 0.7% in 2014, com­pared to an in­fla­tion of 2.8% a year ear­lier. In 2014, the high­est an­nual de­crease in consumer prices, of 3.9%, was posted in recre­ation and cul­ture, while the high­est in­fla­tion, of 7.9%, was recorded by health­care. Un­em­ploy­ment in Mace­do­nia nar­rowed to 27.6% of the to­tal labour force in the fourth quar­ter of 2014 from 28.7% a year ear­lier, ac­cord­ing to of­fi­cial sta­tis­tics. The un­em­ploy­ment rate among peo­ple aged 15 to 24 stood at 50.4% in the Oc­to­ber-De­cem­ber 2014 pe­riod.

Broad money (money ag­gre­gate M4) in­creased by 10.5% year-on-year and reached 309.878 bil­lion denars by De­cem­ber 2014, ac­cord­ing to data pro­vided by Na­tional Bank of the Re­pub­lic of Mace­do­nia (NBRM). The M2 money sup­ply also grew, by 7.2% y/y, to 233.678 bil­lion denars. Money ag­gre­gate M1, or nar­row money, jumped by 22.2% y/y to 85.548 bil­lion denars.

Loans to the non-govern­ment sec­tor to­talled 255.516 bil­lion denars in the fourth quar­ter of 2014, up by an an­nual 9.8%, as house­hold loans in­creased by 11.5% to 108.156 bil­lion denars and loans to non-fi­nan­cial cor­po­ra­tions rose by 8.6% to 147.360 bil­lion denars. The coun­try's gross ex­ter­nal debt widened to 5.954 bil­lion euro by the end of De­cem­ber, up by 14.1%, or 734 mil­lion euro, as com­pared to a year ear­lier. Long-term li­a­bil­i­ties amounted to 4.660 bil­lion euro or 78.3% of the to­tal debt, and short-term li­a­bil­i­ties added up to 1.294 bil­lion euro, or 21.7% of the to­tal.

The coun­try's cur­rent ac­count deficit nar­rowed to 9.715 mil­lion euro by the end of De­cem­ber from 58.069 mil­lion euro a year ear­lier, ac­cord­ing to cen­tral bank data.

For­eign di­rect in­vest­ment (FDI) in­creased by 4.0% to 262.335 mil­lion euro in 2014, ac­cord­ing to NBRM. In 2014, Switzer­land was the big­gest for­eign in­vestor in Mace­do­nia, con­tribut­ing 126.637 mil­lion euro in FDI, fol­lowed by Saint Vin­cent and the Gre­nadines with 53.018 mil­lion euro and the U.K. d with 44.254 mil­lion euro.

In a break­down by in­dus­tries, fi­nan­cial in­ter­me­di­a­tion, ex­clud­ing in­sur­ance and pen­sion fund­ing, was at­tracted the largest amount of FDI, 49.177 mil­lion euro, fol­lowed by food prod­ucts, bev­er­ages and to­bacco prod­ucts with 36.277 mil­lion euro, and mo­tor ve­hi­cles, trail­ers and semi­trail­ers with 26.742 mil­lion euro.

The trade deficit stoo to­talled 407.049 bil­lion denars d at 2.343 bil­lion dol­lars in 2014, com­pared to 2.333 bil­lion U.S. dol­lars in 2013, ac­cord­ing to NBRM. Mace­do­nia's most ex­ported goods in 2014 were chem­i­cal prod­ucts, which ac­counted for 17.6% of the to­tal. In terms of im­ports, non-fer­rous met­als had the high­est share, of 12.5%, of the to­tal im­ports value.

Source: In­ter­na­tional Mon­e­tary Fund (IMF) World Eco­nomic Out­look Data­base – April 2015

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