The International Monetary Fund informs that the blow from rising energy prices as a result of the war in the Middle East is expected to negatively affect economic growth and increase inflationary pressures in North Macedonia.
According to projections, real GDP growth is expected to slow to 3.1 percent in 2026 and gradually stabilize around the potential of 3 percent in the medium term. At the same time, higher global oil prices are expected to increase inflation to about 4.5 percent in 2026, adding to concerns about energy affordability,” the IMF statement said.
The IMF recalls recent measures taken by the government in Skopje to mitigate the impact, including reducing VAT on fuels from 18 to 10 percent and releasing fuel oil from state reserves to keep electricity production costs under control.
According to the IMF, due to rising energy imports, the current account deficit is expected to widen to around 5 percent of GDP in 2026, before gradually decreasing to around 3 percent in the medium term, as global commodity markets stabilize.
“Risks to the outlook are tilted to the downside. A prolonged conflict in the Middle East and higher energy prices, combined with weaker growth in the EU, could further slow economic activity, keep inflation high for longer, weaken the external position, and delay fiscal consolidation,” the IMF warns.
The institution also warns that domestically, fiscal deviations – particularly from frequent and unplanned increases in wages and pensions, as well as cost overruns in major infrastructure projects – could jeopardize fiscal consolidation and reduce market confidence.
