The Development Challenge Macedonia s policies and institutions are not yet sufficient to ensure consolidation of its transition to a fully democratic, market economy.
Structural unemployment is high with about one in three persons officially unemployed.
A large informal economy believed to be at least one-third the size of the official economy temper hardship implied by the official employment statistics. However, a shadow economy of this size suggests the diversion of substantial tax revenues needed for the fiscal budget. Per capita, foreign direct investment in the economy through 1999 has been the lowest in all of CEE, signaling low investor confidence in Macedonia s relative fragile commercial and financial systems. The banking sector has an excess of banks and a high proportion of bad loans. There is virtually no capital market in Macedonia.