Macedonia is coping with its deepest recession in two decades affecting all sectors of the economy and economic activity is forecast to decline by 4.1 percent in 2020, according to the World Bank’s latest Regular Economic Report (RER).
The COVID-19 pandemic is hitting North Macedonia hard, with lockdowns, disrupted supply chains, and a prolonged, adverse epidemiological situation darkening an already dim economic outlook in the country. As a result, the country is coping with its deepest recession in two decades affecting all sectors of the economy and economic activity is forecast to decline by 4.1 percent in 2020,” World Bank Country Manager for North Macedonia MassimilianoPaolucci said at Thursday’s online presentation of Western Balkans Regular Economic Report No.18.
Although government support in North Macedonia has cushioned the impact of the crisis on the labor market, the unemployment rate increased, to 16.7 percent, for the first time since 2011, as 17,690 people lost their jobs in the second quarter of the year. Government support programs also helped alleviate some impact on workers and firms, but fiscal space narrowed, as debt exceeded 60 percent of GDP. With the end of the economic crisis uncertain, pressure on labor markets and incomes is likely to continue for some months, notes the report.The near-term outlook for North Macedonia is positive, but heightened, downside risks remain. The containment phase has not yet finished and a protracted pandemic, coupled with persisting social distancing measures, may further delay a return to recovery, Paolucci said.
Going forward, economic and social measures to remedy the crisis will be the main priority, but it will also be important to continue with necessary medium-term fiscal, competition, environment, and governance reforms to ensure a sustainable recovery and EU accession, he added.