Page 38 - bne IntelliNews Southeastern Europe Outlook 2025

2.8.1 GDP growth
North Macedonia’s government projects economic growth of 3.7% in 2025. The central bank forecasts economic growth rates of 2.3% in 2024 and 3.3% in 2025. Credit activity is expected to play a key role in supporting growth, with the central bank projecting an average increase in credit activity exceeding 7%, bolstered by an expanding deposit base and a stable banking system.
The World Bank anticipates growth to accelerate in the medium term, averaging 2.7% during 2025-2026. This forecast is based on expectations of a rebound in public investments, alongside a gradual recovery in consumption and exports.
The European Commission lowered its 2024 GDP growth forecast for North Macedonia to 2% for 2024 and expects the growth to accelerate to 2.6% in 2025. Looking ahead, growth is expected to increase moderately, driven by private consumption and investment. However, the economy faces mounting financing needs in 2025 and 2026, underscoring the challenges of sustaining growth while maintaining fiscal discipline.
The Commission said that the economic performance in the first half of 2024 was limited by weak external demand, resulting in a modest GDP growth of 1.8% y/y. Domestic demand also weakened, with household consumption growth slowing compared to 2023. Investment offered some support, but its positive impact was largely driven by base effects rather than substantial new growth, said the Commission.
According to the European Commission, the improvement in domestic demand could weaken if household disposable income is affected by a slower recovery in remittances or by inflationary pressures and employment challenges stemming from high wage growth. Investment’s contribution to growth may also be delayed if setbacks occur in the Road Corridor 8/10d project or if progress in managing public investment slows. Conversely, faster integration with the EU, supported by structural reforms outlined in the EU’s Growth Plan, could enhance exports and productivity.
According to the International Monetary Fund, North Macedonia’s economic growth is expected to accelerate to 3.6% in 2025.
Following 2.2% growth in 2024, Fitch forecasts an average growth rate of 3.5% for 2025-2026, supported in part by the construction of the 8 and 10d transport corridors. However, despite robust investment, potential growth remains constrained by low productivity and unfavourable demographic trends.
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