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This paper assesses North Macedonia’s long-term growth prospects and the potential output gains from structural reforms. Potential growth is estimated at 2.6–2.9 percent in 2025 using univariate filters and semi-structural models estimated with a Kalman filter, with results pointing to a small positive output gap. Benchmarking against EU and U.S. frontiers highlights sizable gaps in labor market outcomes, the business environment, and governance. Simulations suggest that closing half of the gap relative to CESEE peers could raise GDP by about 14 percent over five years. The paper discusses reform priorities and implementation considerations to support faster income convergence.
New policy tracker shows many governments pursuing costly responses to fuel and food price hikes, leaving less room to address future challenges
An overall resilient world economy masks significant differences among countries and regions. Energy importers and countries with limited policy space are most vulnerable
Economic thinking must evolve to account for a shift in how nations pursue security, growth, and influence
As governments intervene more, evidence shows that the benefits are modest and depend on thoughtful design
The region’s central banks have built significant credibility over two decades, anchoring price expectations and bolstering resilience against external shocks
Governments can protect vulnerable households, keep businesses open, and preserve price signals without straining public finances
