North Macedonia faces middle-income trap challenges, World Bank warns

The World Bank has released a report regarding the economy of North Macedonia, highlighting that the country has been stuck in the ‘middle-income trap’ for 17 years. While the nation has made progress since independence, the current economic model—reliant on private consumption and low-value-added foreign direct investment—is reaching its limits.

Key challenges identified include low productivity, weak competition, insufficient investment, and a shrinking, underutilized human capital. The report warns that without comprehensive structural reforms in governance, technology, and innovation, annual GDP growth could slow to 2.4% by 2050, leaving a significant gap between North Macedonia and EU income levels. However, if reforms are implemented, growth could reach 3.8% and create up to 250,000 higher-paying jobs.

In response to these findings, Prime Minister Hristijan Mickoski noted that recent GDP growth figures have been trending positively, moving from 2.6% to 3.2% in recent quarters. He expressed optimism that the country could achieve some of the highest growth rates and lowest inflation rates in the region. Additionally, broader regional forecasts suggest that while growth in Europe and Central Asia may slow to 2.2% in 2026, the Western Balkans are expected to see an acceleration in growth to 3.1%.