North Macedonia: Economic Overview, Challenges, and Developments

Since its independence in 1991, North Macedonia has made progress in liberalizing its economy and improving its business environment. Its low tax rates and free economic zones have helped to attract foreign investment, which remains relatively low compared to the rest of Europe. However, corruption and weak rule of law are ongoing challenges. Some businesses report opaque regulations and unequal enforcement of the law.

North Macedonia’s economy is closely tied to Europe, which serves as both a major export market and source of investment. The country has faced setbacks due to prolonged weakness in the Eurozone. Unemployment has consistently remained high at around 23%, though this figure may be overstated due to a large gray market, estimated at 20% to 45% of GDP, which is not captured in official statistics.

Energy Sector Development

North Macedonia is actively working to build a nationwide natural gas pipeline and distribution network. Currently, the country receives a limited supply of natural gas from Russia via Bulgaria. In 2016, it signed a memorandum of understanding with Greece to develop an interconnector. This infrastructure could eventually connect to the Trans-Adriatic Pipeline or an LNG import terminal in Greece, enhancing regional energy integration.

Fiscal Stability and Debt Management

North Macedonia maintained macroeconomic stability through the global financial crisis by adopting prudent monetary policies. The country pegs its domestic currency to the euro and keeps inflation levels low.

However, recent years have seen challenges:

• Political Instability: Internal political crises have hampered economic performance, with GDP growth slowing and both private and public investments declining.
• Fiscal Discipline: Lax fiscal policies, characterized by unproductive public expenditures and missed fiscal targets, have raised concerns.
• Public Debt: As of 2025, public debt stands at approximately 47% of GDP, which is relatively low compared to other regional neighbors .

In 2016, North Macedonia issued a Eurobond worth approximately $495 million to finance budget needs for 2016 and part of 2017.