Macedonia Country Risk Report

Published 23 June 2015 | Quarterly

  • 50 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Macedonia Country Risk Report

Core Views

  • A deal to hold early elections by April 2016 signals a broader commitment among political leaders to resolve a year-long legislative deadlock and keep the country on course for continued EU integration.

  • Strong demand from the eurozone and improving domestic conditions will see business investment and consumer spending rise in Macedonia, driving economic growth higher.

  • Policy continuity and a robust economic growth outlook will ensure a stable fiscal position for Macedonia over the coming years.

Major Forecast Changes

  • We have revised up our real GDP growth forecasts for Macedonia. We forecast economic growth to climb to 3.8% in 2015, up from our previous forecast of 3.4%, and slow to 3.5% in 2016, which is an upward revision from our previous forecast of 3.1%.

Key Risks To Outlook

  • Should Prime Minister Nikola Gruevski fail to step down and make way for an interim government ahead of early elections, which need to be held by April 2016, this could see Macedonia's political crisis spiral out of control.

  • A prolonged political crisis could lead to a major setback in Macedonia's EU integration process, which would lead to capital outflows and see future investment drop off sharply.

Macroeconomic Forecasts (Macedonia 2013-2016)
Indicator 2013 2014 2015f 2016f
National Sources/BMI
Real GDP growth, % y-o-y 2.7 3.3 3.8 3.5
Nominal GDP, USDbn 10.7 11.3 9.6 9.7
Consumer price inflation, % y-o-y, eop 1.4 -0.6 -0.3 0.8
Exchange rate MKD/USD, eop 44.57 50.83 60.29 55.91
Budget balance, % of GDP -3.9 -4.2 -3.6 -3.4
Current account balance, % of GDP -1.8 -1.3 -1.2 -1.1
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Spiralling Political Crisis Risks Permanent EU Setback
8
TABLE: A Chronology Of Maced onia 's Political Crisis
8
Long-Term Political Outlook
9
Unresolved Name Dispute And Ethnic Tensions Pose Long-Term Risks
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Strong Economic Recovery Will Remain On Track
14
TABLE: Eurozone & Germany - Macroeconomic Forecasts
14
TABLE: GDP By Expenditure
14
Fiscal Policy
17
Strong Fundamentals Will Support Fiscal Stability
17
TABLE: Fiscal Policy
17
Balance Of Payments
19
Improved Eurozone Outlook Will Drive Further Current Account Deficit Narrowing
19
TABLE: Top 5 Destinations For Macedonian Goods Exports, % Of Total Exports
19
TABLE: Current Account
19
Regional Economic Outlook
21
'Grexit' Would Be Geopolitical Disaster For Europe
21
Chapter 3: 10-Year Forecast
25
The Macedonian Economy To 2024
25
Pursuit Of Continued Reforms Will Support Steady Return To Growth
25
TABLE: Long-Term Macroeconomic Forecasts
25
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
Labour Market Risk
28
table: South East Europe - Labour Market Risk
28
Logistics Risks
31
table: South East Europe - Logistics Risk
32
Crime And Security
35
table: South East Europe - Crime And Security Risk
35
Trade And Investment Risk
36
table: South East Europe - Trade And Investment Risk
37
Table: Main Import Products, 2012
39
Chapter 5: BMI Global Macro Outlook
41
Global Outlook
41
Deflationary Pressure
41
Table: Global Assumptions
41
Table: Developed States, Real GDP GrowtH, %
42
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
42
Table: Emerging Markets, Real GDP Growth, %
43

The Macedonia Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Macedonia. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Macedonia's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Macedonia's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Macedonia's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Macedonia, including currency volatility, the commodity price boom and protectionist policies.

The Macedonia Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Operational Risk.

Economic Outlook:

How will the Macedonia' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Macedonia through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Macedonia Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Macedonia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Macedonia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Macedonia over the next 5-years?

BMI's Macedonia country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Macedonia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Macedonia.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Macedonia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Macedonia’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Macedonia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Macedonia?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Macedonia against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

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