Page 116 - SE Outlook Regions 2023

3.8 Real economy - North Macedonia

3.8.1 Retail

North Macedonia’s retail sales fell by a real 4.6% year on year in
October, deepening from a 0.7% y/y decrease a month before,
according to statistics office data. In nominal terms retail sales (except
motor vehicles and motorcycles) increased by 12.6% y/y in October
amid annual inflation of 19.8%.

Retail trade in food, beverages and tobacco fell by a real 11% y/y in
October, but rose by a nominal 10.9%.

Retail trade of fuel soared 45.3% y/y in nominal terms, and was up
16.7% in real terms in October.

German discount supermarket chain Lidl is close to opening its first
store in the capital Skopje, after it advertised its first jobs in September
2022. The North Macedonia unit will be run by managers from Lidl's
Bulgarian subsidiary. Lidl already identified a potential location of
200,000 sqm for its logistics centre in Kumanovo, an investment of
€80mn.

After a slowdown in value growth in 2020 when major retailers,
particularly those operating within large shopping malls, were
disrupted, growth accelerated in 2021 to record double-digit value
growth. With COVID-19 having less impact on the country, economic
conditions improved, leading to greater purchasing power for
consumers.

According to Euromonitor International, retail is expected to continue
growing. The country’s recent Nato accession and its EU membership
prospects will also help to boost the country’s ability to achieve its
economic goals, although unemployment and poverty rates remain
high.

In December 2021, North Macedonia introduced a new law on
Packaging and Packaging Waste Management which bans
free-of-charge plastic bags from being distributed in stores for carrying
disposable goods. Instead, retailers must only offer biodegradable bags
that are produced in line with certain standards.

The Swedish clothing retail chain H&M opened its first store in North
Macedonia in August 2022, as part of its expansion plans.

The store is located in East Gate Mall, developed by Albania's Balfin
Group, which was officially opened in October, 2021.

FortonMKA said that Macedonian industrial market accelerated in 2022
in spite of the standstill and uncertainty caused by the ongoing tensions
in Europe. The private sector and the authorities work together to ease
the processes for doing business of FDI countrywide, with a significant

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