North Macedonia’s dwindling population, driven largely by sustained emigration, poses a significant threat to the country’s long-term economic growth, the International Monetary Fund (IMF) warned in a report on Tuesday, calling for urgent policy action to offset the looming drag on output.
In its latest Selected Issues Paper (No. 2025/064), the IMF projects that population decline will reduce North Macedonia’s potential output growth by about 0.5 percentage points by 2030, as falling employment and an ageing workforce limit productivity and investment.
“The population of North Macedonia has been steadily declining over the past two decades and is projected to continue to decline into the foreseeable future,” the report said. “Emigration is expected to weigh heavily on labour supply, particularly among young and skilled workers, unless addressed through comprehensive reforms.”
The 2021 census revised the population down by 11% compared with earlier estimates. Projections from the United Nations suggest the total population could shrink by 4% by 2030, while North Macedonia’s own statistical office estimates a more severe 9% drop.
Lagging Labour Market
While other Western Balkan countries have made gradual progress in labour market reforms, North Macedonia continues to face structural challenges. Labour force participation in 2023 stood at 65%, well below the EU average of 75%, and unemployment, although falling from 26% to 13% over the last decade, remains double that of the EU.
The gender gap is particularly wide. Women’s labour participation in North Macedonia lags behind men by 21 percentage points, compared with an 8-point gap in the EU.
“Most of the labour market gap with the EU is explained by the low participation of women,” the IMF noted, recommending increased access to childcare, reforms to parental leave policies, and reduction of tax disincentives for second earners.
EU Integration Could Accelerate Emigration
The report also modelled the potential effects of EU accession. While deeper EU integration could increase access to markets and boost investment, lower migration costs could lead to a surge in emigration, further straining domestic labour markets.
Without accompanying productivity gains, integration could lower output per capita and reduce wages. However, if EU accession is combined with reforms that enhance productivity—such as judicial and business climate improvements—the net effect could be positive, the IMF said.
Policy Recommendations
The IMF outlined four categories of reforms to mitigate the impact of demographic decline:
Structural reforms to boost total factor productivity, including tackling informality and improving governance;
Active labour market policies such as training and job-matching programs;
Support for small and medium-sized enterprises through simplified regulatory procedures and access to finance;
Labour participation incentives, particularly for women and older workers, including childcare access and flexible working arrangements.
Each of these interventions could help offset the demographic drag, with similar macroeconomic benefits despite targeting different parts of the labour market, the report said.
Closing just one-third of the labour market gap with the EU would be enough to fully offset the expected employment losses from population decline by 2030. The IMF stressed that reducing the gender gap alone could increase potential output by more than 14%.
“Policy action is urgently needed to cushion the economic effects of emigration and population ageing,” the IMF concluded. “Well-designed reforms could preserve labour supply, raise productivity, and support inclusive growth.”