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Geography, agriculture and the economy

Located on the Balkan Peninsula in south-east Europe, the country is bounded on the north by Serbia and Montenegro, on the east by Bulgaria, on the south by Greece, and on the west by Albania. The country covers an area of 25,713 km2. In recent years the population has remained stationary at about 2.0 million.

The land is rugged, with mountains, hills and deep valleys. The area is subject to seismic risk. Summers are warm and dry, and winters are cold, with heavy snowfall.

Agriculture

About half of the land area is devoted to agriculture and is almost evenly divided between cultivated land and permanent pastureland. The principal agricultural products are grapes, wine, tobacco, vegetables, and livestock products. Agriculture generates about 13 per cent of gross domestic product (GDP) and roughly 12 per cent of total employment. Forty per cent of the population lives in rural areas, and most households derive a substantial share of income through crop and livestock production. There are strong linkages between agriculture and other economic sectors such as construction, transportation and industrial processing.

Economy

When the country became independent in September 1991 it was the least developed of the republics that had been part of the Socialist Federal Republic of Yugoslavia. As a result of the break-up of the Yugoslav federal republicand ensuing regional conflict, the newly independent republic lost what had been a large, protected market for its industrial products. Macroeconomic conditions became highly volatile and hyperinflation set in.

In 1993 the government launched a successful programme of economic stabilization and structural reform. Overall, the country’s economy has remained remarkably stable despite further turmoil in the Balkan region. In the late 1990s the Kosovo crisis brought 260,000 Kosovar refugees into the country, closed markets for exports to Serbia and Montenegro and physically isolated the country for several years.

Source: IFAD