Synchronisation of North Macedonia’s GDP cycle with other former Yugoslav economies
Part 4 compares North Macedonia’s GDP cycle with the cycles of Bosnia and Herzegovina, Croatia, Montenegro, Serbia and Slovenia. Synchronisation matters because economies that move together may share trade exposure, financial channels, labour-market links, external demand conditions, tourism shocks or regional spillovers. The analysis uses HP-filtered cycles, cross-correlation functions and the concordance index. Table 5 is used for lead-lag interpretation, but it is not inserted as a displayed blog table.
The visual evidence shows that North Macedonia shares some major regional shocks, especially the global financial crisis and COVID-19, but its cycle is less tightly synchronised with the region than the cycles of Bosnia and Herzegovina, Croatia or Montenegro. The comparison with Bosnia and Herzegovina shows the strongest visual alignment. Both economies share several broad phases, and the pandemic period is clearly visible in both. The comparison with Montenegro also shows common movement around major shocks, although Montenegro’s cycle has much larger amplitude.
The comparison with Croatia is weaker. Croatia’s pandemic movement is much larger, and the earlier post-crisis phases are not as closely aligned. Slovenia also shares the major European-cycle episodes, but the relationship is moderate rather than strong. The comparison with Serbia is the weakest in phase terms. Some common shocks are visible, especially COVID-19, but the broader sequence of expansions and contractions is less consistently aligned.
The cross-correlation results confirm that North Macedonia’s regional synchronisation is mostly contemporaneous but moderate. Using the file-order convention, negative lags are interpreted as the first-named series leading the second, while positive lags suggest the second-named series leading the first. For Bosnia and Herzegovina and North Macedonia, the zero-lag correlation is the strongest, around 0.707. The adjacent lag values are much lower, about 0.381 at lag -1 and 0.360 at lag +1. This indicates a meaningful contemporaneous relationship rather than a clear lead-lag structure.
For Croatia and North Macedonia, the zero-lag correlation is around 0.562, with neighbouring lags around 0.318 and 0.304. This is a moderate relationship. It suggests shared regional or European shocks, but not a tightly synchronised cycle. For Montenegro and North Macedonia, the zero-lag correlation is higher, around 0.682, and lag +1 is also relatively high, around 0.532. Since Montenegro is listed first in the file name, this pattern may suggest some one-quarter displacement between the two cycles, but the strongest relationship remains at the same quarter.
For North Macedonia and Serbia, the zero-lag correlation is about 0.552, while all nearby lags are much weaker. This is the weakest contemporaneous relationship among the reported pairs involving North Macedonia. For Slovenia and North Macedonia, the zero-lag correlation is about 0.582, with lag -1 at about 0.385. Since Slovenia is listed first in the file name, this may indicate that Slovenia sometimes leads North Macedonia by one quarter, but the main result is still a moderate contemporaneous relationship.
Table 6. Concordance index
| Series1 | Series2 | N | N11 | N00 | Nc | C_index | p_value |
|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | North Macedonia | 104 | 30 | 35 | 65 | 0.625 | 0.014 |
| Croatia | North Macedonia | 105 | 29 | 34 | 63 | 0.600 | 0.050 |
| Montenegro | North Macedonia | 81 | 28 | 20 | 48 | 0.593 | 0.119 |
| North Macedonia | Serbia | 105 | 24 | 34 | 58 | 0.552 | 0.329 |
| Slovenia | North Macedonia | 105 | 26 | 36 | 62 | 0.590 | 0.078 |
Table 6 gives the phase-based summary. North Macedonia’s highest concordance is with Bosnia and Herzegovina, at about 0.625, and this result is statistically significant. Croatia follows at about 0.600, with a borderline p-value. Montenegro is close, at about 0.593, but not statistically significant. Slovenia is about 0.590, also not conventionally significant. Serbia is the weakest pair, with a concordance index of about 0.552 and a clearly insignificant p-value. This hierarchy is important. North Macedonia is not disconnected from the region, but its synchronisation is weaker and less statistically robust than the synchronisation observed among some other former Yugoslav economies.
The conclusion from Part 4 is that North Macedonia’s GDP cycle is regionally connected but relatively idiosyncratic. It shares major shocks with the region, especially COVID-19, but its business-cycle phases do not line up as consistently with neighbouring economies as do the cycles of Croatia, Bosnia and Herzegovina or Montenegro. The strongest link is with Bosnia and Herzegovina; the weakest is with Serbia. This suggests that North Macedonia’s cycle should be analysed both in the regional context and on its own terms.
Methodological appendix to Part 4
The cross-correlation function measures the relationship between two cyclical series at different leads and lags. A peak at lag zero means that the two cycles move most strongly at the same time. A peak away from zero may suggest that one economy leads or lags the other. The sign of the lag must be interpreted according to the order of the series in the calculation.
The concordance index measures how often two economies are in the same cyclical phase. Each quarter is classified as expansion or contraction for each economy. If both economies are in expansion, or both are in contraction, the quarter is concordant. The index is the share of comparable quarters in which the phases match. A value close to one indicates strong synchronisation, while a value close to one half suggests weak phase alignment. Concordance should be read together with the cycle graphs and cross-correlations, because two economies may share shocks while still having different phase timing or amplitude.
Overall conclusion
North Macedonia’s quarterly GDP series from 2000Q1 to 2026Q1 is strongly trending, persistent and seasonally structured. The time-series features show high trend strength, high seasonal strength, strong autocorrelation and non-stationarity in levels. The ARIMA model performs well as a short-term forecasting tool: it passes residual checks, outperforms the reported benchmark models and keeps all holdout observations inside the forecast intervals. Business-cycle dating identifies a mid-2000s expansion, a global-financial-crisis contraction, several shorter cycles in the 2010s, a clear COVID-19 contraction and a recent return to above-trend readings. Regional synchronisation is present but weaker than in some neighbouring economies. North Macedonia is most aligned with Bosnia and Herzegovina, moderately aligned with Montenegro, Croatia and Slovenia, and weakest in relation to Serbia.
The broader message is that North Macedonia’s GDP cycle should be read as both regional and idiosyncratic. It shares the region’s major shocks, but its phase alignment is not as strong or as stable as in the more synchronised pairs of the former Yugoslav space.
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