Q: What are the developments in the Macedonian macro economy in the last five years?

A: The economy of Macedonia has been expanding and growing at a rate of 5% or more in the last five years due to the political stability in the country and the region. The enactment of Trade Companies Law in 2004 eliminated barriers to foreign investments, strengthened shareholders rights, and offered additional incentives.

A stable macroeconomic environment played a key role in international trade and attracting foreign investors to the country in the last five years . Recent liberalization of the telecommunications and power sectors also increased the interest of investors in these sectors.

In the past, agriculture and industry dominated economic activity, however in recent years the services sector has gained higher prominence in the economy. The Macedonian population is generally young, and as the nation transitions to a market based economy the country is undergoing several structural reforms. The open economy is integrated in international trade, and wholesale and retail trade is one of the most important sources of employment.

Export growth has been steadily increasing over the last two years at a rate of roughly 30% annually. Foreign direct investments were also at an all-time high in 2007 and 2008, with investments in those two years exceeding the total in the last five years.

Until 2007 inflation has been below 2%, however with the sharp rise in energy prices inflation surged in 2008 to 8.3%. Nevertheless, inflation has been on the decline in the past six months.

Finally, the Macedonian currency has been stable for the last eleven years as it enjoys a soft peg to the Euro. It''s not a hard peg. It''s a soft peg where the currency fluctuation in this period has been less than 0.5%. This stability is crucial especially at this point in time where many of the countries in Eastern and Southeastern Europe are experiencing devaluation.

This means predictability and long-term stability in the prices of products we export and in operating costs. This stability and predictability is important to foreign investors as our major trading partners are in Europe.

This recent stability has allowed Macedonia to reach $4,600 in GDP per capita.

Q: Which countries are the leading trade partners of Macedonia?

A: Macedonia''s leading trading partners are Serbia, Germany, Greece, Russia, Italy and Bulgaria. Passenger vehicles, steel and iron products, and chemicals are leading import products. Macedonia''s leading exports are steel products, textiles, tobacco and processed food and wine. In 2008 year 59.5% of the total export is to the EU27 countries and 48.1% of the total import is from the EU27 countries.

Q: How do labor costs and labor availability compare to other European nations?

A: Monthly labor cost on average for 2008 was about ˆ430 or $550, which is one of the most competitive rates in Eastern Europe. The important thing here is not only the cost but annual increase in labor cost. In Macedonia the annual increase over the last three years has been in line, which has been low, whereas in recently joined EU nations costs have been increasing between 15% and 25% a year. Labor costs in Romania in the last two years have increased 20% annually. Similarly, labor costs in the Czech Republic, Hungary, Poland and Slovakia have surged because labor markets are saturated. In addition, many skilled people have immigrated to Western Europe from these countries.

For example, labor costs in Poland exceed ˆ1,200 a month - approaching the cost in some Western European countries. Companies are looking for new locations with competitive labor costs but at the same time an abundant supply of labor to ensure that the same trend will not occur two or three years from now.

One other thing that is very interesting about Macedonia is our fiscal package. We have the most beneficial tax rate in Europe. We have a flat 10% corporate and personal income tax, and at the same time, as of January this year we have zero percent tax on retained earnings. In other words, many companies that do not pay dividend or repatriate profit, do not pay any taxes. So, as long as there is reinvestment or they increase the capital of the company, they don''t have to pay taxes.

For many countries in Eastern Europe a very large percentage of gross salary goes towards social contributions. What we have done in Macedonia starting from last year through 2011, is decrease the social contribution by one-third. Employers can either lower average salaries or pay that as additional amount to a social contributions account.

Q: What is the level of education among young people?

A: We are the second youngest nation in Europe based on our population. Forty-five percent of our people are below the age of 30. Additionally, we have mandatory elementary and high school education. In 2008, 85% of our high school graduates were enrolled in universities. That amounts to a lot of people seeking higher education, many of which are going into technical fields.

University enrollment in the period between 2005 and 2007 has increased 35%, and graduation rates have also increased.

Q: What is the unemployment rate in Macedonia?