North Macedonia Faces Potential Economic Losses of 4% GDP by 2050 Due to Climate Change, Warns World Bank Report

The Climate Public Finance Review, presented alongside the CCDR, calls for fiscal reforms to accelerate the green transition.

North Macedonia could suffer economic damages amounting to 4% of its GDP by 2050 as a result of climate change, according to the World Bank’s new Country Climate and Development Report (CCDR) launched in Skopje today. The report emphasizes the urgent need for US$6.4 billion in climate adaptation investments over the next decade to protect people, property, and key sectors from intensifying climate threats.

The country's history of devastating floods and extreme weather events such as torrential rains and heatwaves has already resulted in US$667 million in losses over the past 20 years. With small family farms especially vulnerable due to inadequate irrigation, hail protection, and insurance, climate risks are disproportionately affecting North Macedonia's agricultural sector, says Massimiliano Paolucci, World Bank Country Manager for Kosovo and North Macedonia.

Beyond adaptation, North Macedonia must accelerate its energy transition to reach net-zero emissions by 2050, in line with European Union targets. The report stresses that transitioning away from fossil fuels will enhance the country’s energy security, foster a modernized energy system, and lead to better air quality and economic improvements through reduced operating costs.

“Reaching net-zero by 2050 is possible but will require significant investment,” said Nicolas Marquier, IFC Regional Manager for the Western Balkans. The report outlines the need to build 6.9 GW of renewable energy capacity, electrify key sectors such as transportation—aiming for 90% of passenger cars to be electric vehicles by 2050—and increase energy efficiency to cut annual heating energy consumption by 36%.

The Climate Public Finance Review, presented alongside the CCDR, calls for fiscal reforms to accelerate the green transition. By removing subsidies for coal-fired electricity and introducing carbon pricing, North Macedonia can generate up to EUR 730 million annually. This revenue could be reinvested in green initiatives and mitigation efforts, while also supporting vulnerable households during the energy transition.

The carbon pricing mechanism is not only a tool for reducing emissions but also a potential means to improve air quality and public health, said Sanja Madzarevic-Sujster, lead author of the report. The collected revenues could play a crucial role in financing the country’s just transition to a sustainable economy, ensuring that the benefits of the green shift are shared equitably across society.