Since independence, the Republic of North Macedonia has made tangible progress on social, economic, and institutional development. Income per capita doubled, and the economy moved from lower-middle-income to upper-middle-income status. Thanks to its strategic location at the heart of the Western Balkans, a relatively low-cost labor force, and generous tax credits, the Republic of North Macedonia has attracted considerable foreign direct investment (FDI), and trade openness has more than doubled in the past two decades (with exports and imports increasing as a share of gross domestic product (GDP) from 70 percent in 2003 to 170 percent today—the highest in the region). Living standards have improved, and extreme poverty and inequality have decreased, owing to the implementation of important social protection reforms that have endowed the country with functioning systems to protect the most vulnerable, especially during the recent crises. 

The Republic of North Macedonia’s National Development Strategy (NDS) sets the long-term vision for the sustainable development until 2044. As a nationally led, long-term strategic framework, the NDS establishes a foundation for a competitive and dynamic private sector, inclusive growth, green transformation, and institutional resilience. It identifies six strategic areas and articulates strategic priorities necessary to advance national goals, European Integration, and Sustainable Development Goals (SDGs) while fostering a competitive and equitable economy. In doing so, the NDS provides a unifying policy reference point for aligning public investments, development partner support, and private sector engagement. 

After a significant revision of national accounts, real GDP growth moved up to 2.8% in 2024. Output growth was driven by government consumption and investments, while net exports dived into negative territory. On the production side, growth was led by services and construction, largely related to highways, while manufacturing battled with weak external demand for car-supply parts. 

Labor market indicators (15+) improved further in 2024, with a 0.4 percentage point increase in the employment rate and 0.1 percentage point increase in the participation rate to 45.8% and 52.3%, respectively, but gains were not uniform. While the total unemployment rate dropped to 12.4%, this was driven by those with primary and secondary education. The unemployment rate among those with higher education increased by 1.7 percentage points. The youth unemployment rate (15-24) remains high at 28.9%. 

The medium-term outlook remains positive, but underlying vulnerabilities are rising. The recent shifts in global trade policy and increased uncertainty, while having a low direct impact, will indirectly affect the economy through multiple channels. Growth is expected to average 2.8% during 2025-2027, below earlier projections, as higher spending on public investment projects is offset by slowing private consumption and exports. Headline inflation is projected to remain above the long-term average until 2027, but to fall towards the 2% target thereafter.