The economies of the Western Balkans are likely to expand faster than the European Union in 2019-2020, said the World Bank in its latest regular economic report on the region, Reform Momentum Needed, released on April 2, noting that it is facing growing external and domestic risks, including geopolitical and trade disputes and a slower-than-expected pace of structural reforms.
"Prolonged trade disputes between the United States and China, potential trade restrictions between the United States and the EU, and uncertainty about Brexit talks between the EU and the United Kingdom are generating anxiety about protectionist policies that would ultimately hurt global, and therefore Western Balkan growth prospects," says the report, commenting on the external risks facing the region.
The report said that fiscal stimuli and favorable external conditions propelled regional growth of the six countries in 2018 but political risks may come to dampen medium-term growth.
According to the global lender, the region encompassing Albania, Bosnia, Kosovo, Macedonia, Montenegro and Serbia would grow by 3.7 percent on the average in 2019 and 2020, in line with the rest of Central and Eastern Europe.
“There is growing public discontent in several countries which could lead to higher political uncertainty and a slower pace of structural reforms,” the report said.
The economies of Bosnia, Kosovo and North Macedonia will accelerate this year to 3.4 percent, 4.4 percent and 2.9 percent respectively, driven by investments in the energy sector, domestic demand and consumer confidence, the report forecast.
The report also said Western Balkan economies also face risks from slower-than projected growth in the EU, wider geopolitical and trade disputes, and a possible tightening of financing conditions in capital markets.
The bank praised fiscal consolidation and reduced public debt in Albania and Serbia, but warned that it is “critical to safeguard these gains” and said that in 2018 debt remained on the rise in Montenegro, North Macedonia and Kosovo.