With a gross national income per capita of around $2,830 in 2005 (GNI, Atlas method), the former Yugoslav Republic of Macedonia (FYR Macedonia) is a lower middle-income country. It is located at the crossroads of important transport routes connecting Central and Eastern Europe with South and South East Europe and beyond.

FYR Macedonia's landlocked position, small size, and relatively high degree of economic openness (foreign trade accounts for over 90 percent of GDP) make it highly dependent on external developments. As a result, the country is especially vulnerable to shocks, which have occurred frequently during the past 15 years.