Political noise despite solid economic policies
Overview:
Macedonia has fared pretty well during the global economic crisis. Economic growth slowed but the recession was shallow and relatively short-lived. The authorities successfully defended the exchange rate peg with a combination of tight fiscal and monetary policy. Growth is now accelerating with inflation and the current account deficit low. Instead of going to the IMF for a traditional balance of payments support the government has obtained a contingent credit line. This acts as a firewall against financial market contagion and access to it reflects the strong macroeconomic policy performance of the government. Much more needs to be done to reduce still very high levels of unemployment however. The political situation is noisy with the opposition boycotting parliament and early elections looking likely.