dor Gillian A. MILOVANOVIC
embassy: Bul. Ilindenska bb, 1000 Skopje
mailing address: American Embassy Skopje, US Department of State,
7120 Skopje Place, Washington, DC 20521-7120 (pouch)
telephone: [389] 2 311-6180
FAX: [389] 2 311-7103

Flag description:
a yellow sun with eight broadening rays extending to the edges of
the red field

Economy Macedonia

Economy - overview:
At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the central government and
eliminated advantages from inclusion in a de facto free trade area.
An absence of infrastructure, UN sanctions on the downsized
Yugoslavia, and a Greek economic embargo over a dispute about the
country's constitutional name and flag hindered economic growth
until 1996. GDP subsequently rose each year through 2000. However,
the leadership's commitment to economic reform, free trade, and
regional integration was undermined by the ethnic Albanian
insurgency of 2001. The economy shrank 4.5% because of decreased
trade, intermittent border closures, increased deficit spending on
security needs, and investor uncertainty. Growth barely recovered in
2002 to 0.9%, then averaged 4% per year during 2003-06. Macedonia
has maintained macroeconomic stability with low inflation, but it
has lagged the region in attracting foreign investment and job
growth has been anemic. Macedonia has an extensive grey market,
estimated to be more than 20 percent of GDP, that falls outside
official statistics.

GDP (purchasing power parity):
$16.91 billion
note: Macedonia has a large informal sector (2006 est.)

GDP (official exchange rate):
$5.649 billion (2006 est.)

GDP - real growth rate:
4% (2006 est.)

GDP - per capita (PPP):
$8,200 (2006 est.)

GDP - composition by sector:
agriculture: 13%
industry: 27.7%
services: 59.3% (2006 est.)

Labor force:
880,000 (2006 est.)

Labor force - by occupation:
agriculture: 21.7%
industry: 32.6%
services: 45.7% (September 2006)

Unemployment rate:
35% (2006 est.)

Population below poverty line:
29.6% (2004 est.)

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Distribution of family income - Gini index:
28.2 (1998)

Inflation rate (co