Country risk of FYROM : Economy

FYROM is the poorest of the former Yugoslavian republics. After a period of transition, the economy experienced more continuous growth between 2004 and 2008 (5% on average annually), driven by domestic consumption and exports (especially metals and textile products). In 2009, the country experienced a recession (-0.9% of GDP) and its budget deficit deepened (-2.7% of the GDP), which still remained a moderate effect compared to the regional average. In 2011, growth reached 3% (in comparison to 1.8% in 2010). 

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 was more than 31.3% in 2011. Inflation is under control (3% in 2011). FYROM has a considerable unofficial economy which represents about 35% of its GDP.

The need for international recognition and the continuing uncertainty at both regional and European levels prompted the authorities to seek IMF assistance. In January 2011, the country became the first to receive a Precautionary Credit Line (PCL) for a total of EUR 476 million over two years, due to the stability of its macroeconomic fundamentals: limited budget deficit, targeting exchange rates, contained inflation, low public debt and bank stability). FYROM has also been a target site for European (IPA) and international funding (World Bank, EBRD).

The main concern for 2012 is the persistence of the budget deficit, which is likely to decrease due to higher imports contained by modest growth and a tight fiscal policy. Thus according to the IMF, the budget deficit, which reached 6% in 2010, is expected to decline to 4.1% in 2014.

WTO member since March 2003, the country has, since December 2005, been the official candidate to EU accession. The negotiation process is however blocked by its dispute with Greece over the name of the country.

Score:

66.0/100

Position:

Moderately free

World Rank:

51/179

Regional Rank:

22/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation