The World Bank has predicted in a report on Thursday economic growth of 3.2 percent this year and 3.5 percent in 2025 in the six countries of the Western Balkans. Growth in 2023 fell to 2.6 percent from 3.4 percent in 2022, mainly due to consumption and trade, reflecting the weak economy in the European Union, which is an important trading partner for the Western Balkans.
In its annual report for Kosovo, Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia, the World Bank raised its growth forecast for 2024 by 0.2 percent compared to previous reports, based on optimism that the region has overcome the crises of the Covid-19 pandemic.
But, she warned of the ongoing risks of weak trade and investment with the eurozone, which are linked to continued weaknesses in global growth, as well as opportunities for increased geopolitical tensions, emigration, electoral uncertainty and continued inflation.
The inflation rate in the region fell sharply, from 14.3 percent in January 2023 to 5.1 percent in December 2023.
In Kosovo, the inflation rate is around 2 percent, but the prices of products and services have remained high since inflation has reached its peak in 2022, according to the Statistics Agency of Kosovo (ASK). That year, Kosovo ended with an average inflation rate of around 12 percent. The World Bank warned the region that it must carry out a series of reforms to narrow the development gap with the European Union. All six countries of the region want to join the EU.
“The bloc’s new growth plan for the Western Balkans presents an opportunity to stimulate economic development through reforms and investments, especially in the green economy,” said Xiaoqing Yu, the World Bank’s director for the Western Balkans.
Xiaoqing was referring to the EU’s €6 billion plan for the six countries of the Western Balkans.
The plan was presented in November 2023, and foresees that two billion euros will be non-returnable funds, while the other four billion will be given in the form of affordable loans.
Each country is expected to prepare a reform agenda, based on the preliminary recommendations of the EU bodies, before its evaluation and approval by the European Commission. Reforms in the field of order and rule of law are essential to benefit from funds from this plan.
