The International Monetary Fund (IMF) has released its concluding statement following the 2025 Article IV mission to North Macedonia. The statement outlines preliminary findings from the IMF staff visit, conducted as part of regular consultations under Article IV of the IMF's Articles of Agreement. These missions are typically undertaken annually to assess economic developments in member countries.
According to the IMF, growth in North Macedonia is gaining momentum with an expected rate of 3.3 percent in 2025. This growth is driven by stronger domestic demand due to public investment projects like the Corridor 8/10d road project and supported by government transfers and real wage growth. However, weak external demand from 2024 is expected to persist due to structural shifts in the European automotive sector. Long-term potential growth is projected at 3.0 percent, hindered by high emigration rates among young people.
Inflation has risen again, reaching 4.9 percent year-on-year in January, up from a low of 2.2 percent in August 2024. Core inflation remains persistent, driven by strong wage growth despite efforts such as administrative price controls.
The IMF highlights elevated domestic risks and an uncertain external outlook for North Macedonia's economy. Weak public investment, stalled productivity reforms, emigration, and slowing activity among key trade partners pose threats to medium-term growth.
"IMF staff agree with the authorities' goal of reducing the deficit this year," but there are concerns about revenue performance which could affect achieving this target. A credible fiscal strategy is necessary for bringing debt on a downward path and restoring compliance with fiscal rules while maintaining access to international capital markets.
The statement emphasizes structural fiscal reforms needed to strengthen governance and improve spending efficiency. Measures include implementing public investment management decrees and conducting spending reviews.
Monetary policy should remain stable until inflation declines steadily. The National Bank (NBRNM) should be prepared for further tightening if inflationary risks materialize from domestic or external factors.
The financial system is described as resilient but may require tighter macroprudential settings due to brisk credit growth towards the end of 2024. "Should lending and real estate prices continue growing briskly," further tightening might be necessary.
Structural reforms aimed at boosting productivity and offsetting emigration costs are supported by IMF staff who note that "over the past decade, growth in North Macedonia has lagged regional peers."
The IMF team expresses gratitude for the collaboration with North Macedonian authorities during their mission.