Slow Growth in Western Balkans: Challenges and Opportunities for Economic Development

In its latest report on the Western Balkan region, comprising Albania, Bosnia, Kosovo, Montenegro, North Macedonia, and Serbia, the World Bank has projected that economic growth will rise by 3.2% this year and 3.5% in 2025. This growth is expected to return to pre-pandemic averages but is still considered too slow for faster convergence with the European Union (EU).

The report by the World Bank highlighted that inflation rates in the region have fallen significantly from 14.3% in January 2023 to 5.1% in December 2023. However, variations in the pace of price deceleration among countries remain a concern for economists. To narrow the development gap with the EU and achieve faster convergence, the six countries in the Western Balkans need to implement a range of reforms, particularly in areas such as infrastructure and structural changes.

Inflation rates have decreased significantly from their peak levels during the Covid-19 pandemic period. The World Bank highlighted that implementing a range of reforms is critical for faster convergence with the EU and achieving sustainable economic growth in these six countries. The bank recommended investing in critical infrastructure projects and structural changes to improve integration with the single market of the EU.

The report also warned about remaining risks such as weaker investment and trade with the eurozone, geopolitical tensions flare-ups outward migration, electoral uncertainty, and persistent inflation rates that can impact economic growth negatively. Despite these challenges, there are opportunities for economic development through investments in green technology and enhancing livability in cities across these six countries.

Xiaoqing Yu, country director for the Western Balkans at the World Bank emphasized that leveraging Europe’s Growth Plan is essential to support economic development in these regions.

Overall, this report highlights that while progress has been made towards achieving faster convergence with the EU