European debt crisis-genesis and implications

European debt crisis cause disruption of the Macedonian financial sector, which was manifested by a decline in real GDP, decline in exports, tightening of financing and increased debt. The problems are even greater if we know that the European crisis was followed by the global financial crisis of 2008, whereby may state that devastating effects are even greater and more destructive on euro scale but also in the Macedonian economy, too. Issues about the effects of the European debt crisis are very interesting and actual because, there are still not finished and may accumulate negative outcome for both, the European Union and the Republic of Macedonia.

The main objective of this thesis is to investigate the problems and future challenges generated by the European debt crisis on the Macedonian financial and real sector, which can be ascertained by monitoring the following variables: movement of the real GDP, indebtedness, the trade deficit in the balance of payments.

The results shows that regarding current circumstances, Republic of Macedonia should focus on stimulating private sector as the main generator of economic growth, debt reduction and rational spending as well as an increase in lending, i.e. expansionary monetary policy.