S&P Downgrades Macedonia's Rating

S&P cites lack of infrastructure, insecure energy reserves and a high unemployment rate as the main factors that restrict growth. 

S&P further forecasts 2.4 per cent of economic growth for this year while in 2012 they say it should climb to 3.12 per cent.

In addition, S&P said the outlook for Macedonia looks stable, reflecting the possibility that Macedonia's creditworthiness could improve if the nation can adequately address issues that constrain its growth.

The downgrade to double-B is two notches below what financial experts are calling investment-grade territory marked with a grade triple-B.

Macedonia briefly climbed to triple-B in 2009 sending a signal that the country is relatively safe to invest in.

The latest ratings also reflect S&P's concerns about the "sovereign's structural rigidities" and a "residual latent, though declining, risk of interethnic tension".

In 2001, Macedonia suffered a short lived conflict when a rebel force of ethnic Albanians, the country’s biggest minority, confronted the state security forces. A peace deal was signed the same year but ethnic relations are still deemed as relativley fragile and in need of constant management.