Presentation at UN Women’s conference

Today we participated in the conference “Transforming Care Systems in North Macedonia through an Inclusive, Gender-Responsive Approach,” organized by UN Women Skopje, in partnership with national institutions and with the support of the British Embassy Skopje.

The conference focused on the 📖 study “Transforming Care Systems in North Macedonia: Gender, Care Needs, and Financing Pathways for an Inclusive Care Economy,” prepared by Finance Think for UN Women.

📌 Investing in the care economy is not only a social policy priority — it is an investment in higher employment, greater economic inclusion, and more sustainable development.

#TransformCare #GenderEquality #CareEconomy

In the podcast “Where Is the Money?”, Blagica Petreski discusses current economic topics

IMF and World Bank on the global and Macedonian economy

The Spring Meetings in Washington of the International Monetary Fund and the World Bank have concluded.
The global economy is slowing down. Governments face major challenges. Meanwhile, under the radar of the Macedonian public, the IMF Mission’s report on the Macedonian economy passed with little attention.

In the latest episode of the podcast “Where Is the Money?”, Blagica Petreski speaks with Goran Temenugov about where both the global and the Macedonian economy are heading.

Webinar on State Aid Registry in Montenegro

Today we successfully held a webinar focused on Montenegro’s experience in establishing a state aid register — an important step towards enhanced transparency and more effective monitoring of state aid in the region.
🎤 Many thanks to Siniša Milačić Agencija za zaštitu konkurencije
for the excellent presentation and valuable insights on:
✔ institutional setup
✔ data collection and publication practices
✔ implementation process
✔ key challenges and lessons learned
👏 We also thank all participants from across the region for the active discussion and exchange of experiences.
This webinar is part of ongoing efforts to strengthen institutional capacities and regional cooperation on state aid in the Western Balkans.

FT Opinion 69 on Inflation in the Month Following the Outbreak of the Military Conflict Between the US/Israel and Iran

The State Statistical Office has released the data on price developments for March 2026, which marks the first month following the outbreak of the military conflict between the United States/Israel and Iran.

According to these data, prices increased by 0.7% on a monthly basis and by 4.9% on an annual basis.

Given the heightened expectations of accelerating price growth driven by the sharp increase in global crude oil prices, this brief examines whether this oil shock has evolved into a broader price shock, that is, whether it has spilled over into the general price level.

Signs indicating a spillover of the oil shock to other prices

On a monthly basis, prices showed some stabilization, declining by 0.7% in January 2026 compared to December 2025, followed by a modest increase of 0.2% in February 2026 relative to the previous month. In this context, the 0.7% increase in prices in March compared to February 2026 may signal a mild acceleration of inflation, particularly given that—had the military conflict in Iran not occurred—expectations were for inflation to continue on a path of further moderation. However, such monthly dynamics are not dramatically higher than those observed during 2025 (Chart 1).

Chart 1 – Monthly inflation dynamics

Source: SSO.

However, from this general picture, two groups stand out (Chart 2):
i) Transport (3.4%), within which the price of fuels and lubricants for personal transport equipment increased by 11.4% in March compared to February 2026; and
ii) Alcoholic beverages, tobacco, and narcotics (3.2%), entirely driven by the increase in tobacco prices (4.3%).

While the price increase in the first group is fully a reflection of the military conflict in Iran, the second group is unrelated to it. The direct effect of higher crude oil prices is most clearly observed through the sharp increase in liquid fuels (18.7%), although its overall weight is relatively small, as the broader category of Housing, water, electricity, gas, and other fuels recorded only a modest price increase of 0.2%.

Chart 2 – Monthly dynamics of selected inflation components

Source: SSO.

Similarly, within the food category, a notable monthly increase is observed in oils (2.2%), likely driven primarily by reduced global supply of palm oil (due to adverse weather conditions) and sunflower oil (due to the war in Ukraine), as well as higher transport costs resulting from rising oil prices.

Based on the monthly inflation dynamics, there is a modest—one could say limited but not negligible—pass-through effect from global oil prices to the overall price level. This is in line with our earlier estimates presented in Policy Brief No. 78: How much will the global oil shock pass through to the domestic economy? (10 March 2026), which suggest that a 10% increase in oil prices leads to an additional increase in the overall price level of about 0.1 to 0.2 percentage points in the short run, i.e., within the first 1–3 months following the shock.

This effect reflects both the direct impact of petroleum products in the consumption basket and the indirect impact through transport costs and certain limited product groups.

Signs that may be misinterpreted as spillovers of the oil shock

At first glance, the annual inflation rate of 4.9% in March 2026 appears concerning, as it represents an acceleration compared to March 2025 and deviates from expectations of a gradual decline toward around 3%.

However, there is a risk that these data may be misinterpreted as evidence of a broader spillover of the oil shock into the general price level, which is not supported by the underlying dynamics. A comparison with March 2025 reveals a significantly low base, resulting from the Easter–Ramadan administrative measures that froze margins and prices of food, beverages, and household chemical products, which were in effect from 20 February to the end of April 2025 (see Chart 3).

Chart 3 – Annual inflation dynamics

Source: SSO.

This low base effect is particularly evident in food prices (see Chart 4), which increased by a substantial 7.5% year-on-year in March 2026, while prices of alcoholic beverages and tobacco rose by 8.8%. For other groups that exhibit relatively high annual growth in March 2026 but display stable monthly dynamics, the increase reflects a cumulative effect (from April 2025 through March 2026), which we previously assessed in earlier short analyses (e.g., FT Opinion No. 67 on minimum wages, productivity, inflation, and informal employment, 18 February 2026) as being driven by rising incomes in the economy.

Chart 4 – Annual dynamics of selected inflation components

Source: SSO.

Although the oil shock is already clearly visible in fuel prices and transport costs, there is, for now, no evidence that it has spilled over into broader, systemic inflation. If the annual rate of 4.9% is interpreted as an alarm signal, it would be misleading, as it largely reflects a low base effect created by the administrative price freeze in the same period last year. Nevertheless, the current monthly increase is not negligible and, if sustained, could quickly evolve into broader inflationary pressures through second-round effects—initially in food products and subsequently across the wider consumption basket.

In conclusion, the current increase in prices primarily reflects the economy’s direct exposure to the oil shock, without clear signs of widespread spillovers. However, this stability is fragile: if energy prices remain elevated and continue to rise, the risk of a broader inflationary wave—through transport costs and inflation expectations—will increase significantly. Therefore, the current data do not justify panic, but neither do they allow for complacency. Close monitoring of monthly dynamics will be crucial in the coming months. In this context, strictly targeted measures to mitigate the impact on the most affected households and firms should be prepared and ready for rapid and effective deployment should the price shock intensify.

According to our earlier estimates (see FT Opinion No. 68 on the inflationary effects of the energy shock, 26 March 2026), if the conflict persists and/or escalates, broader-based effects could begin to materialize as early as April, with more pronounced intensity from June onward.

 

Round table on the public procurement in municipalities

Today in Prilep, together with representatives of local institutions, civil society, and the business community, we discussed and addressed several important questions:

💰 Who wins municipal tenders?
🤝 Is there sufficient competition?
📊 Are citizens of Prilep and Krushevo getting value for money?
💬 Open discussion. Real questions.

📊 IMF visits Finance Think

Today, at Finance Think, we held a meeting with representatives of the International Monetary Fund, where the focus was placed not only on current economic developments, but also on their analytical #interpretation and the #risks ahead.

📈 Inflation and its outlook were at the center of the discussion. Drawing on our latest analyses and model-based calculations, we examined the effects of energy shocks and possible scenarios for the Macedonian economy. The discussion also extended to broader structural issues – the fiscal position and its role in cushioning shocks, conditions and tensions in the labour market, challenges related to the informal economy, and the implications for productivity and long-term growth.

The focus was on what the #numbers mean and what comes next – that is, how current trends translate into policies and economic expectations.

🤝 We see cooperation with the IMF as an important channel for validating and advancing our analytical approaches, with the aim of better understanding economic risks and supporting informed policymaking.

#FinanceThink #IMF #Economy #Analysis #Policy

FT Opinion 68 on the inflationary impact of the energy shock

Finance Think conducted a model-based assessment of the effects of the current geopolitical shock on inflation, based on three scenarios that differ in terms of the intensity and persistence of the energy price shock, as well as the way in which it is transmitted through the economy.

In the baseline scenario, it is assumed that the shock is already partly embedded in current market prices and that there is no further escalation. Energy prices rise in the short term, peaking by the end of the second quarter of 2026, after which they stabilise relatively quickly amid a de-escalation of military activity and begin to decline gradually in the second half of 2026 and throughout 2027. The pass-through to other prices is limited and gradual, without significant second-round effects.

In the adverse scenario, a stronger, yet still time-limited, shock is assumed. Energy prices increase more sharply and reach a higher peak in the third quarter of 2026, while uncertainty and external conditions deteriorate further. In this scenario, the transmission to other prices is more pronounced, including both indirect and second-round effects, but over time the shock begins to recede, with visible normalisation during 2027.

In the extreme scenario, a strong and persistent shock is assumed, associated with prolonged geopolitical escalation and lasting supply disruptions. Energy prices continue to rise and reach their peak toward the end of 2026, in the fourth quarter, after which they remain relatively high for a longer period and begin to decline more slowly during 2027. The transmission through the economy is more intense and broader, which makes inflationary pressures more persistent and more pronounced.

The results of the model-based calculations for North Macedonia show that inflation would rise under all scenarios, but with significant differences in dynamics. In the baseline scenario, the increase in inflation is moderate and short-lived, peaking in mid-2026 and followed by gradual normalisation. In line with this, Finance Think revises its projection for average inflation in 2026 to 3.5%, with pronounced upside risks.

In the adverse scenario, the peak is higher and shifts to the second half of 2026, while the return to lower inflation rates is slower. Under this scenario, 2026 would end with an average inflation rate of 6.1%. In the severe scenario, inflation reaches its highest level toward the end of 2026 and remains elevated throughout 2027, pointing to a more persistent shock. Under this scenario, average inflation in 2026 would amount to 8.2%.

The key conclusion is that the duration of the shock is decisive for its impact on inflation. If energy prices stabilise relatively quickly, inflationary pressures will remain contained. However, if the shock persists, it will generate broader and more prolonged price pressures through higher costs of production, transport, and imports.

Although the risks of higher inflation are real, the results suggest that the most likely outcome is a relatively moderate inflationary wave, rather than a repetition of the price shock experienced in 2022.

Over €200 million annually for state aid – a need for greater transparency and control

Over €200 million per year is allocated to state aid in North Macedonia, but these funds are dispersed across multiple institutions, making them difficult to track and manage. According to data from the Commission for Protection of Competition, state aid amounted to €206 million in 2023 (around 1.5% of GDP), while in 2024 it reached €235.2 million, or 1.52% of GDP.

These issues were at the center of the regional panel discussion “Strengthening state aid governance in the Western Balkans: transparency, effectiveness and EU alignment”, organized by Finance Think, which brought together more than 40 representatives of institutions from Western Balkan countries. The conclusion was clear: there is a pressing need to establish a central state aid register that would enable greater transparency, better coordination, and more systematic measurement of the effects of different programs.

The Minister of Finance, Gordana Dimitrieska-Kochoska, emphasized that this is a substantial fiscal amount that must be treated as an investment rather than a burden:

“State aid must not represent a burden on public finances, but rather an investment in competitiveness and sustainable growth. According to data from the Commission for Protection of Competition, state aid amounted to €206 million in 2023, or around 1.5 percent of GDP, while in 2024 it reached €235.2 million, or 1.52 percent of GDP, which underscores the need for a high level of accountability and transparency.”

The Executive Director of Finance Think, Blagica Petreski, pointed out that there is currently a lack of micro-level data on which companies receive state aid, from which sectors, and for what purposes, limiting the quality of policy design.

“Our recommendation is to establish the central state aid register as soon as possible, as there is a wide range of programs being offered. This would not only increase transparency, but also allow for more detailed measurement of effects. When planning the introduction of a specific measure or program, an impact evaluation of potential effects is essential, and once implemented, the measure should be evaluated to avoid repeating past mistakes where large amounts of funds were spent without tangible results. State aid is one of the most underestimated topics, given that budgetary allocations under this heading reach up to 2 percent of GDP in some years, particularly during crisis periods.”