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The Macedonian Economy

Recently ranked as the fourth 'best reformatory state' out of 178 countries ranked by the World Bank, Macedonia has undergone considerable economic reform since independence. The country has developed an open economy with trade accounting for more than 90% of GDP in recent years. Since 1996, Macedonia has witnessed steady, though slow, economic growth with GDP growing by 3.1% in 2005. This figure is projected to rise to an average of 5.2% in the 2006-2010 period. The government has proven successful in its efforts to combat inflation, with an inflation rate of only 3% in 2006 and 2% in 2007 and has implemented policies focused on attracting foreign investment and promoting the development of Small and Medium-sized Enterprises (SMEs). The current government introduced a flat tax system with the intention of making the country more attractive to foreign investment. The flat tax rate was 12% in 2007 and will be further lowered to 10% in 2008.

Despite these reforms, as of 2005 Macedonia's unemployment rate was 37.2%[40] and as of 2006 its poverty rate was 22%. Corruption and a relatively ineffective legal system also act as significant restraints on successful economic development. The Republic still has one of the lowest per capita GDPs in Europe. Furthermore, the country's grey market is estimated at close to 20% of GDP.

In terms of structure, as of 2005 the service sector constituted by far the largest part of GDP at 57.1%, up from 54.2% in 2000. The industrial sector represents 29.3% of GDP, down from 33.7% in 2000 while agriculture represents only 12.9%, up from 12%. Textiles represent the most significant sector for trade, accounting for more than half of total exports. Other important exports include iron, steel, wine and vegetables.

Source: Wikipedia

 

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