INTERVIEW - Global Crisis Hits Macedonia’s Metallurgy, Textile, Leather Industry

The latest survey of Macedonia's real sector conducted by the Economic Chamber has shown that export-oriented sectors have suffered most, Azeski said in statement e-mailed to SeeNews.

“Polls show cases of halts in production, delays in implementation of contracts with foreign partners […] which has been reflected in lay-offs”, Azeski said.

Ferro-nickel plant FENI Industrija AD announced last week it will lay off 200 workers as of January 1, 2009 as global nickel prices have fallen to around $9,900 (7,660 euro) per tonne, far below profitability level. Steel pipes and fixtures producer IGM Trejd doo also said it will dismiss 100 employees in January, due to the deepening financial crisis.

Ferroalloy companies Skopski Leguri dooel and Silmak dooel, as well as steel mill ArcelorMittal Skopje AD, also reported difficulties in their operations caused by the global turmoil.

"There is drop in industrial production due to lower demand," said Azeski.

Among the textile companies hit by the crisis is Greek-owned Helmateks, based in the southern city of Strumica. Over 150 factory workers were dismissed earlier this month due to drop in demand from foreign partners, Macedonian media reported.

The latest job cuts add to Macedonia's already high unemployment rate, which was 33.8% at the end of the second quarter of 2008 according to the country's Statistics Office.

According to official statistics, Macedonia's October industrial output fell by 16.9% month-on-month and was 9.9% down from a year earlier. In a sector breakdown the output of metal products fell by 48.4% year-on-year in October, production of base metals was down 37.6%, clothing industry posted a 23.9% drop in output, textile production was 10.8% lower than in October 2007 and leather industry showed a 10% yearly drop.

Azeski said that Macedonia's economy, however small it is, is an open economy exposed to the influence of globalization and the financial crisis.
 
“The crisis has caused serious recessional consequences to Macedonia’s most important trade partners, which resulted in reduction of exports of domestic firms and reluctance to sign long-term cooperation agreements. Accordingly, the companies are seriously hit by these financial problems," Azeski added.

Statistics show that Macedonia’s trade deficit more than doubled to $2.226 billion (1.718 billion euro) at the end of the third quarter from $1.062 billion a year earlier. Macedonia's biggest foreign markets are European Union member states and the countries of the western Balkans. The country of two million people exports mainly ferro-nickel, iron and steel products, lubricants and clothes, and imports mostly crude oil, electricity, and motor vehicles.

The Macedonian government has adopted a set of 10 measures worth a total of 330 million euro ($428 million) to help the country's economy cope with the impact of the global economic crisis. Azeski said that the Economic Chamber supports the government's aid package.

Part of the package is the lowering of import duties on nearly 500 products and the write-off of accumulated interest on unpaid social insurance contributions and taxes if the companies pay in full the amount that they owe on the principal. The measures include one envisaging that businesses would pay profit tax only if they distribute their profit as dividend payment to their shareholders.

“The business community will keep on watching what is happening in the real sector on a daily basis and will inform the Macedonian government on pending developments”, Azeski said.

Macedonia's government targets real economic growth of 5.5% next year versus 6.0% for 2008 in the government's forecast. The European Bank for Reconstruction and Development, however, expects Macedonia's economy to grow by real 4.7% in 2009, slower than the 5.3% growth rate it has forecast for 2008.

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