EC Report: Economy Grew 3.5 Percent in 2025, Unemployment Fell Below 12 Percent and Banks Remain Stable

Skopje – If the economy were a pupil, the European Commission would have written that it knows a lot but does not practise enough. That is the picture in the economic part of the 2026 report on North Macedonia, published on November 4, covering the period from September 1, 2025 to September 1, 2026: strong figures at the top of the page and warnings right below them.

“Real GDP growth accelerated in 2025, driven by domestic demand,” the report says. Growth was 3.5 percent, against 2.8 percent a year earlier, according to last year’s report. Unemployment is below 12 percent, and in last year’s report it was about 12.5 percent.

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The 2025 deficit declined in line with plans and was about 4 percent of GDP, while last year it was 4.4 percent. Public debt is about 59.4 percent of GDP, against 53.8 percent in the previous report, an increase of 5.6 percentage points by the editorial calculation. The figures are for different years and the methodology may differ, so the difference is indicative. The Commission nevertheless notes that “the composition of spending deteriorated”.

The banking sector remained resilient despite a strong rise in credit growth. Non-performing loans fell to 1.9 percent, the lowest level so far, and by June 142.1 million euros had been released from the Growth Plan’s Reform Agenda. That is the most concrete result of the reforms that Brussels tracks.

The ratings are read on two scales. For a functioning market economy the country has a “good level of preparation”, but “limited progress” over the past year. For the ability to cope with competitive pressure in the EU it is “moderately prepared”, with “some progress”. The first scale measures the level, the second the movement. The base, then, is good, but the last twelve months did not bring much movement.

The hardest line in the economic part is about investment. “Capital spending execution continues to suffer from weak public investment management,” the document states. 64.6 percent of planned capital spending was executed, which means that 35.4 percent of the money planned for investment was not spent. Pension spending is about 11.8 percent of GDP, and inflation rebounded.

There is also a postponement on the budget side. The entry into force of the organic budget law, postponed last year to 2026, has now been postponed “to January 2028”. At the same time the Commission asks for a Fiscal Council that is fully independent.

The recommendations are concrete: less tax expenditure, containing the growth of public sector wages and pensions, a faster public investment action plan, a law on public-private partnerships and a new plan to reduce the informal economy. On the other hand, the digitalisation section notes that the number of e-services reached 338 by the end of August 2026, and 44 institutions already use an electronic archive system.

The economic page is the strongest in the report, but it does not change the formal condition for negotiations. “No progress was made towards adopting relevant constitutional changes as required under the 2022 Council Conclusions,” the document states. Progress exists and is officially recorded, while the key to moving the negotiations forward remains the constitutional changes.

MKNews Hub · Macedonia · November 6, 2026