The Economic Consequences of the COVID-19 Crisis on the Economy of the Republic of North Macedonia

Abstract

The COVID-19 pandemic brought rapid and unexpected changes across the global economy.
Fiscal and monetary policies lacked prepared mechanisms and teams to manage such a crisis, further
weakening the ability to mitigate its consequences on economic activity. The COVID-19 crisis represents
one of the largest global shocks in recent history and significantly influenced the economic flows of the
Republic of North Macedonia. It caused severe disruptions in production, transportation, and trade, leading
to a slowdown in economic activity and reduced revenues for many companies. Regarding exports, the
Macedonian economy faced decreased international demand, particularly in the automotive industry and
metallurgy—key export sectors. Imports also declined due to reduced domestic demand and disruptions in
global supply chains. These processes directly affected foreign direct investment (FDI), which, under
conditions of uncertainty and diminished risk appetite, was redirected toward safer markets, leading to
postponed or reduced planned investments in the country. The most visible indicator of economic
slowdown was the drop in Gross Domestic Product (GDP) in 2020, as a consequence of lower productivity
and consumption. Nevertheless, the gradual adaptation of economic actors and government support
measures enabled partial stabilization. The analysis shows that the COVID-19 crisis not only highlighted
the structural weaknesses of the Macedonian economy but also emphasized the need for market
diversification, greater digitalization, and enhanced resilience to future crises.