Macedonia Fifth in Europe for GDP Growth: Growth on Paper Is One Story, Growth in the Wallet Quite Another

Macedonia is fifth in Europe for gross domestic product growth in the first quarter, behind Denmark, Malta, Poland and Serbia - at least according to Eurostat, which Prime Minister Hristijan Mickoski was careful to stress is not the government talking but European statistics.

The figure is real: 3.1 percent GDP growth in the first quarter, the seventh quarter in a row of growth. For comparison, the EU is growing around 1 percent, and the eurozone 0.8. On paper, that is a respectable result for a small economy.

But when you look beneath the headline, the picture is more nuanced. The main engine of growth is construction - +7.2 percent - and final consumption. Manufacturing, meanwhile, fell by 0.2 percent, and mining by 0.8. In other words, what is growing is what gets built and spent, not necessarily what gets produced. And growth leaning on construction and consumption is more fragile than growth leaning on production.

There are real positive signals too - industrial output in April jumped by 7.6 percent year on year, unemployment fell from 12.5 to 11.7 percent, and the government claims 16,000 new jobs were created in 21 months. Finance Minister Gordana Dimitrieva-Kočoska added that a 700 million euro eurobond was also repaid.

Still, one spot on the Eurostat ranking is not felt in the average citizen's shopping basket. The question every government in the Balkans wants to dodge is a simple one: if the economy has grown for seven quarters straight, why don't rents, bills and the price of bread follow that „European" trend in the opposite direction? Growth on paper is one story; growth in the wallet - quite another.