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Macedonia's Economics

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Macedonia: Economic History and Current Economic Environment The economy of Macedonia was almost none existent before its independence in 1991. During the period of the former Republic of Yugoslavia control “Macedonia only produced 5% of the total output of federal goods” (CIA, Macedonia Economy-overview), compared to all other former Yugoslav states. In Macedonia from 1991-1996 the economy was very unstable due to no government aid, which it formerly received from the Republic of Yugoslavia. Macedonia also had embargoes and trade sanctions from Greece and the United Nations respectively during this period. In 1996, the economy began steady growth until 2001. In 2001 internal conflict caused a decrease in GDP but rebounded quickly after. The economy took a hit in 2008 when the world economic problems caused a worldwide recession. With little effect on GDP from the recession, late in 2008 the Macedonian economy began recovering with a rise in exports and strengthening the infrastructure. During 1991-1996 the economic growth rate was minimal at best. From 1991 to 1994 the GDP declined because there was no foreign direct investment and the economy was drastically affected with a decline in growth. “The economy settled on a positive growth path from 1996 onwards but this was interrupted in 2001, the year of internal civil conflict.”(ILO, p.10) The change from a socialist economy to a market economy has had its ups and downs; the unemployment rate is very high at 29.1%(CIA), “but may be overstated based on the existence of an extensive gray market, estimated to be between 20% and 45% of GDP, that is not captured by official statistics.”(CIA) The economy of Macedonia is based on FDI and exports. The exports that lead the charge for Macedonia’s young economy was “clothing at first but eventually turned to raw materials like iron and steel.” (ILO, p.15)

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