North Macedonia stands on the cusp of a transformative year, with crucial parliamentary and presidential elections on the horizon and economic indicators pointing towards a potential uplift in fortunes. Following a phase of moderate growth, with a GDP increase of 2.1 percent in 2022 and a similar expansion in 2023, this landlocked Balkan nation is poised for a more robust upswing in 2024.

The European Bank for Reconstruction and Development projects an acceleration of real GDP growth to three percent next year. This optimism is rooted in anticipated regional integration, a push towards a green economy, and efforts to enhance competitiveness through value chain improvements and workforce upskilling.

Despite grappling with near 10 percent inflation in 2023, the government plans to rein in the fiscal deficit from 4.7 percent to 3.4 percent in 2024, signaling a move towards economic stabilization and fiscal prudence.

However, unemployment remains a challenge. While the rate is expected to marginally decrease from 15.2 percent in 2022 to 14.8 percent in 2024, job creation continues to lag, despite government support to employers.

In the economic landscape, manufacturing, especially automotive components and textiles, is a key driver, accounting for nearly a quarter of the GDP. IT has emerged as the fastest-growing sector, with an annual growth rate of up to 15 percent, bolstered by a skilled and cost-effective workforce, solid telecommunications infrastructure, and a competitive corporate tax regime.

North Macedonia’s national ICT strategy for 2023-2027, aligning with the EU’s Digital Economy and Society Index (DESI) goals, sets clear objectives for government infrastructure, ICT centralisation, and e-government services. A €27 million hybrid investment fund focusing on start-ups and innovative companies further underscores the government’s commitment to fostering a digital and entrepreneurial ecosystem.

The country’s economic ties with Germany, particularly through its automotive sector, have been a cornerstone of its export strategy. Despite the global economic slowdown, North Macedonian exports to Germany have shown resilience, with no significant indications of a downturn impacting the local economy.

On the political front, Prime Minister Dimitar Kovačevski’s government is steering the country through the aftermath of the pandemic, economic and energy crises, and the complex EU accession process. However, the path to EU membership is clouded by pending constitutional amendments, including the recognition of the Bulgarian minority, which has created political uncertainty and could potentially slow down economic reforms.

The upcoming elections will be a litmus test for North Macedonia’s political and economic trajectory, particularly regarding its EU aspirations. While the country’s commitment to reforms and EU integration remains strong, public support for EU membership is waning, reflecting growing frustration with the protracted accession process.

In this pivotal year, North Macedonia’s focus on economic and energy crisis management, coupled with EU-aligned reforms, will be critical in shaping its future, both domestically and in its quest for European integration.