North Macedonia

North Macedonia is a small, landlocked country in the heart of the Balkan Peninsula, bordered by Greece, Albania, Bulgaria, Kosovo, and Serbia. With a population of approximately 1.83 million (2021 census), the country is ethnically diverse and nearly a quarter of the population lives in the capital, Skopje, while around 40% reside in rural areas. The population is aging and shrinking, with a fertility rate of 1.5 and an estimated diaspora of over 500,000 citizens abroad.

An upper-middle-income country, North Macedonia had a GDP per capita of approximately $6,591 in 2022, roughly one-third of the EU average in PPP terms. The economy is anchored by services (57% of GDP), covering trade, transport, and telecommunications, followed by industry (23%), which includes automotive components, metallurgy, and textiles largely oriented toward EU export markets. Agriculture contributes around 8% of GDP and plays an important social role in rural employment, with key exports including vegetables, fruit, tobacco, and wine. The ICT sector is emerging as a fast-growing area. EU accession aspirations continue to be a key driver of structural reforms across the economy.

Read More

Read Less

North Macedonia’s growth strengthened in 2025, with GDP growth reaching 3.5%, driven by highway construction and the services sector. Rising wages, together with increases in food and services prices, kept inflationary pressures elevated. Revenue shortfalls and a rising debt stock underscore the need for timely fiscal consolidation.

Medium-term prospects hinge on addressing persistent structural constraints that continue to limit productivity, inclusive growth, and convergence with EU living standards.

The medium-term outlook is subject to high risk, with downside risks and uncertainty elevated. Between 2026 and 2028, growth is projected to be driven primarily by domestic demand. Heightened external uncertainty linked to the conflict in the Middle East poses risks to the growth and inflation outlook. Higher global commodity prices and potential supply chain disruptions could increase import costs, placing additional pressure on the current account. Moreover, a slowdown in key trading partners, particularly in the EU, could weigh on export demand and remittances.

Read More

Read Less

The Government’s 2024–2028 program prioritizes growth and EU oriented reforms, with infrastructure as a central pillar. North Macedonia's approach to job creation has centered on public spending, active labor market programs, and incentives for foreign investment—including subsidized employment schemes, large infrastructure projects, and support for Special Economic Zones—which drove meaningful employment gains over the past decade. However, most jobs created have been concentrated in low-productivity, low-wage sectors, and rising wages are gradually eroding the country's competitiveness as a low-cost destination. Addressing persistent challenges such as high youth unemployment, low female labor force participation, regional disparities, would be critical to create more and better jobs.

The World Bank's engagement in North Macedonia spans investment lending across a broad range of sectors, including agriculture, transport, trade, education, energy efficiency, social protection, and public financial management, with a focus on strengthening fiscal sustainability and improving services for vulnerable populations. Gender-responsive interventions are also embedded in the portfolio—for example, the Social Services Improvement Project has expanded preschool infrastructure, creating jobs and enabling more women to participate in the labor market. Scaling up climate-resilient infrastructure and supporting the transition to cleaner energy are additional priorities within the investment program.

Complementing these operations, the World Bank provides analytical and advisory services to inform policy, including an upcoming flagship report on Growth and Jobs that examines productivity, skills, trade, competition, and innovation, as well as a Public Finance Review that calls for sustained fiscal adjustment, stronger revenue mobilization, improved public administration, and more efficient and equitable spending on health and education.

Read More

Read Less

The World Bank Group's Country Partnership Framework (CPF) 2024-2028 for North Macedonia was endorsed by the Board of Directors on January 23, 2024. The CPF’s overarching objective is to support North Macedonia in becoming more competitive, sustainable, inclusive, and resilient, with a focus on competitiveness, human capital development, and environmental sustainability.

It builds on three main pillars that aim to:

1. Improve public service delivery by enhancing efficiency and transparency. This includes strengthening public financial management, accountability, and fiscal sustainability while improving public service delivery, while improving public spending in education, health, and social protection.

1. Create more productive private sector jobs. Under this pillar, the CPF aims at improving connectivity and market access through improved road infrastructure, digital trade facilitation, reducing transport costs and clearance times while supporting regional integration and EU value chains. Furthermore, the CPF strengthens foundational skills across the life cycle by expanding access to early childhood education, improving teaching quality in primary education, and better aligning education and training systems with labor market needs to support productivity and inclusive growth.

1. Sustain the transition to greener energy sources. The CPF aims to increase climate resilience by addressing environmental constraints to support sustainable growth and quality of life. It advances energy efficiency, decarbonization, renewable energy, and cleaner heating while reducing air pollution and reliance on coal. The program also scales up resilient transport, urban, water, and social infrastructure to strengthen adaptation to climate change and disaster risks.

Read More

Read Less