26th March 2025, Skopje – Republic of North Macedonia is implementing credible and consistent macroeconomic policies that underpin the longstanding de facto exchange rate, more favourable governance indicators than peer medians, as well as its commitment to the reforms as part of the EU accession process, as concluded by Fitch Credit Agency in the latest report, whereby the country kept the BB+ credit rating with a stable outlook.
The Agency noted that the real GDP growth reached 2.8% despite the external headwinds, exceeding estimates due to strong government spending and investments. Fitch anticipated for the growth to peak at 4% owing to the implemented investments along 8/10d road corridors, while also indicating that the investment pipeline remains strong, but weak productivity growth and poor demographics constrain the medium-term growth, while also recording strong FDIs inflows. As stated, foreign net FDI soared to a 17-year high of 7.1% of GDP in 2024, reflecting robust investments in free economic zones. As per Fitch, unemployment remains structurally high due to skill shortages and uneven regional economic development. Wage growth is strong, averaging 13% annually in 2022-2024, having no adverse effects on competitiveness.
As noted in Fitch Report, the country posted a budget deficit of 4.6% of GDP in 2024, being slightly short than the revised target of 4.9% under the Supplementary Budget, due to stronger than projected revenues and some under-execution of capital expenditures.
In 2025, Fitch expects a largely unchanged deficit, given the projected ramping up of capex and normalisation of pension and social security expenditure. The introduction of the electronic invoicing is expected to contribute positively on the revenue side. As per the Agency, the grants from the Western Balkans Growth Plan will contribute to a decline in the deficit to 4% by 2026. Fitch’s projections show medium-term debt exceeding 58% of GDP.
In 2024, inflation averaged 4.2%, driven by strong wage growth, increased domestic demand and robust private sector credit growth, according to Fitch.
The credit rating is assigned by analysing the Government’s implementing policies, giving insight into the level of risk associated with investing in a particular country and it is one of the key indicators the potential investors consider when making decisions.
Both Standard&Poor’s and Fitch revise the country’s credit rating twice a year.
