Despite positive growth in the final quarter of 2012, data showed that Macedonia's GDP contracted by 0.3% on year in 2012, as strong state-led investment was largely offset by declining exports and domestic demand.

IHS Global Insight expects only a modest recovery in 2013 as the difficult external economic environment will continue to weigh on growth.

"Looking forward, the prospects for 2013 are not much better as demand for FYR Macedonian exports will continue to reflect a difficult external economic environment in Europe, although the nascent recovery in Germany should boost the outlook. While growth is likely to remain subdued in 2013 a second year of recession is not likely. The latest data has indicated that FYR Macedonia's economy is already experiencing a tentative rebound: industrial production increased by 2.6% y/y," IHS says.

Source: bne