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Country Report Macedonia

  • ID: 2123793
  • June 2015
  • Region: Macedonia
  • 28 Pages
  • The Economist Intelligence Unit

Following the events of the weekend of June 27th-28th-including the Greek government's call for a referendum on the deal offered to the country by its external creditors-we have revised up our estimate of the probability of a Greek exit from the euro area. "Grexit" is now our base case for Greece, although it can still be avoided. We expect that the referendum, to be held on July 5th, is most likely to produce a "no" vote, as recommended by the Greek government. This will have potentially far-reaching effects on politics and economics in Greece's Balkan neighbours-particularly in countries where Greek banks have a large presence and in those whose macroeconomic imbalances make them vulnerable to indirect contagion.

Politicians and central bank officials in Balkan countries have been at pains to emphasise that since the Greek sovereign debt crisis first emerged at the end of 2009, their banking systems have been insulated from the potential collapse of Greek banks. This has been made necessary by developments before the global credit squeeze and subsequent world recession of 2009, when Greek banks expanded aggressively into the formerly communist-ruled countries of south-eastern Europe.

As a result of the pre-crisis expansionary phase, local subsidiaries of leading Greek banks play an important role in the financial sector in several Balkan countries, particularly Albania, Bulgaria, Macedonia, Romania and Serbia. Greek banks account for 22% of total banking assets in Bulgaria, around 20% in Macedonia, 16% in Albania, 14% in Serbia and about 12% in Romania.

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Country Report Macedonia

Greek crisis: what impact on Balkan neighbours?
Measures in place to boost banking sector resilience
Vulnerability to financial contagion
Impact on foreign trade and FDI likely to be limited
Euro zone entry set to be delayed

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Note: Product cover images may vary from those shown

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