Business Monitor International


Macedonia Business Forecast Report

Published 16 December 2014

  • 41 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Macedonia Business Forecast Report

Core Views

  • A weakened policy-making process in Macedonia will increasingly invite criticism from EU observers, while declining economic activity in Europe will make the benefits of stricter adherence to accession criteria less appealing. This raises uncertainty over the policy direction in Macedonia in the medium term and could derail the long-standing convergence process.

  • Economic growth in Macedonia will continue to rise in the near future as domestic demand continues to strengthen. Nevertheless, beyond 2015, real GDP growth will gradually decelerate as the impact of weaker external demand on exports and fixed investment catches up with an otherwise robust economic recovery.

  • As regional economic weakness is beginning to take its toll on an otherwise resilient German economy, so the outlook for Macedonia's trade account will continue to notably deteriorate over the coming years.

Major Forecast Changes

  • We have revised up our real GDP growth forecast for 2014 and 2015 to 3.3% (from 2.7%) and 3.5% (from 2.5%) respectively.

  • We have changed our outlook for Macedonia's current account, now expecting a widening of the shortfall to 2.2% of GDP in 2014 (from 1.9% in 2013), and 3.5% of GDP in 2015. We previously expected a narrowing of the deficit to 1.3% of GDP by 2015.

Key Risks To Outlook

  • An increasingly negative picture for eurozone economic growth will take its toll on goods exports, as well as business confidence, which could significantly limit scope for a permanent recovery in fixed investment growth in the economy.

  • Our trade in goods outlook is already factoring in a significantly less favourable external environment. However, we may currently be underestimating the adverse implications of weaker regional growth on private transfer flows into Macedonia.

Macroeconomic Forecasts (Macedonia 2012-2015)
Indicator 2012 2013 2014f 2015f
Real GDP growth, % y-o-y -0.4 2.9 3.3 3.5
Nominal GDP, USDbn

Table of Contents

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
Rising Uncertainty Over Future EU Convergence
8
A weakened policy-making process in Macedonia will increasingly invite criticism from EU observers, while declining economic activity in
A weakened policy-making process in Macedonia will increasingly invite criticism from EU observers, while declining economic activity in
Europe will make the benefits of stricter adherence to accession criteria less appealing
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
10
Unresolved Name Dispute And Ethnic Tensions Pose Long-Term Risks
10
Stalled progress on Macedonia's EU accession hopes and lingering ethnic tensions remain major challenges to the county's long-term
Stalled progress on Macedonia's EU accession hopes and lingering ethnic tensions remain major challenges to the county's long-term
stability
Moreover, we note that a deteriorating demographic picture could pose severe economic challenges and exacerbate ethnic
tensions as Macedonian society grows more heterogeneous over the coming decades
Chapter 2: Economic Outlook
15
SWOT Analysis
15
BMI Economic Risk Index
15
Economic Activity
16
Stronger Growth Despite Rising External Headwinds
16
Economic growth in Macedonia will continue to rise in the near future as domestic demand continues to strengthen
Nevertheless,
beyond 2015, real GDP growth will gradually decelerate as the impact of weaker external demand on exports and fixed investment
beyond 2015, real GDP growth will gradually decelerate as the impact of weaker external demand on exports and fixed investment
catches up with an otherwise robust economic recovery
TABLE: BMI Economic Growth Forecasts
16
TABLE: GDP By Expenditure
17
Balance Of Payments
19
German Economic Weakness Will Take Major Toll On Current Account
19
As regional economic weakness is beginning to take its toll on an otherwise resilient German economy, so the outlook for Macedonia's
As regional economic weakness is beginning to take its toll on an otherwise resilient German economy, so the outlook for Macedonia's
trade account will continue to notably deteriorate over the coming years
In addition to a weaker export performance, we also see a
less positive picture for private transfers into Macedonia, which will lead to further widening of the current account deficit through to
less positive picture for private transfers into Macedonia, which will lead to further widening of the current account deficit through to
2016
TABLE: Goods Exports By Largest Destination, % Of Total Exports
19
TABLE: Largest Goods Exports By Category, % Of Total Exports (In Descending Order)
20
TABLE: Current Account Balance
21
Fiscal Policy
22
Expansionary Fiscal Policy Sustainable, Renewed Consolidation Ahead
22
Macedonia's nominal budget deficit will begin to shrink in 2015, despite higher government expenditure
Stronger economic growth and
institutional endorsement by the EU of Macedonia's latest infrastructure spending programmes mean that the increase in public debt to
institutional endorsement by the EU of Macedonia's latest infrastructure spending programmes mean that the increase in public debt to
above 40% of GDP will not prove overly costly for the government
TABLE: Fiscal Policy
23
Regional Outlook
24
Sluggish Rebalancing Impedes Regional Recovery
24
Germany's current account peaked at 6
8% of GDP in 2013, but domestic demand will not be strong enough in the coming years to
support eurozone rebalancing or a stronger regional recovery
By perpetuating eurozone savings imbalances, impeding a more robust
recovery and encouraging investment into low yielding assets,
recovery and encouraging investment into low yielding assets,
TABLE: Balance Of Payments
24
Chapter 3: 10-Year Forecast
27
The Macedonian Economy To 2023
27
Pursuit Of Continued Reforms Will Support Steady Return To Growth
27
Macedonia's reformist trajectory looks set to generate solid GDP growth through to 2023 amid steady convergence to EU political and
Macedonia's reformist trajectory looks set to generate solid GDP growth through to 2023 amid steady convergence to EU political and
economic standards
TABLE: Long-Term Macroeconomic Forecasts
27
Chapter 4: Operational Risk
29
Operational Risk Index
29
Operational Risk
30
table: South East Europe - Labour Market Risk
30
table: South East Europe - Logistics Risk
34
Table: South East Europe - Crime And Security Risk
37
Table: South East Europe - Trade And Investment Risk
39
Table: Main Import Products, 2012
41
Chapter 5: BMI Global Assumptions
43
Global Outlook
43
Warning Signs Growing
43
Table: Global Assumptions
43
Table: Developed States, Real GDP Growth, %
44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Table: Emerging Markets, Real GDP Growth, %
45

The Macedonia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Macedonia and 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-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Macedonia's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Macedonia's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Macedonia, including currency volatility, the commodity price boom and protectionist policies.

The Macedonia Business Forecast Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Business Environment.

Economic Outlook:

How will the Macedonian economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Macedonia through end-2017 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 Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, 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 Ratings 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 exposure).
  • Global Assumptions - forecasts for each year to end-2017 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 Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Macedonian Market - Political Strengths, Weaknesses, Opportunities and Threats facing Macedonia.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings 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.

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.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Macedonia, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Macedonia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express