Western Balkan countries need a new model of growth based on higher productivity and investments, higher exports and a higher share of the private sector in the economy.
According to the World Bank on Thursday, Western Balkan countries have made progress in public finance reforms and in regenerating economic growth during the past few years. However, the WB said that their citizens may not be feeling the benefits yet.
Linda Van Gelder, WB Country Director for the Western Balkans, said in Vienna at the presentation of her report that reforms and macroeconomic stability can help these countries to have annual growth of approx. 5 pct, which would enable them to reach EU standards in 20 years, rather than in the six decades projected by the WB with the growth rates they achieved in 1995-2015.
Two weeks earlier, the latest World Bank’s Western Balkans Regular Economic Report was issued in Pristina, Kosovo, saying all six countries in the Western Balkans are expected to see growth in 2017, with regional growth forecast to accelerate to 3.3 percent in 2018 and 3.6 percent in 2019. Investment drove strong growth in Albania, Kosovo, and Montenegro, while consumption led to stable growth in Bosnia and Herzegovina. An earlier political crisis subdued growth in FYR Macedonia, as did a severely cold winter in Serbia.
Despite pointing out to the progress made, the report warned that policy uncertainty or possible policy reversals could dampen investment and growth. It further said that these risks can be mitigated by maintaining fiscal sustainability, while accelerating structural reforms - such as strengthening public finances and improving the environment for investment and integration - as well as by advancing the European Union (EU) accession agenda.