World Bank revises 2021 GDP forecast for Western Balkans to 5.9%

Aerial view of Sarajevo, Bosnia and Herzegovina, June 7, 2021. REUTERS / Dado Ruvic / File Photo

SARAJEVO, Oct.21 (Reuters) – The World Bank on Thursday revised upward its economic growth forecast for six Western Balkan countries to 5.9% in 2021 after contracting 3.1% in 2020 due to the pandemic COVID-19, but warned the recovery remains fragile.

In its regular semi-annual report on the region, the lender estimated that the economies of Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia could grow by 4.1% in 2022 and 3.8% in 2023.

“A faster-than-expected recovery is actually due to two main factors: the national reopening triggered by various robust recoveries in domestic consumption and tourism-related demand, followed by very strong external conditions,” said Richard Record, economist. main country for the Western Balkans.

Record said the risks of keeping growth aligned with the same factors if reversed, meaning consumption, remittances and tourism would be affected in the event of further pandemic-related lockdowns or international restrictions. of movement.

Additionally, the countries of the Western Balkans are lagging behind their European neighbors in COVID-19 vaccination, with rates below 40% in most countries except Serbia. and Kosovo.

Record said exhausted fiscal space and high debt levels will continue to weigh on the region, and political uncertainty will delay the resumption of domestic and foreign investment the region needs to boost potential output.

The bank also said the labor market is recovering at a slower pace than the economy, and structural reforms are needed to address job creation and economic transformation, including the green transition.

Record said the report focused closely on macro-fiscal challenges and drivers of greening the region’s growth, which was necessary but not easy to manage.

“The reality is that the status quo is no longer an option, as we are seeing a shift in external preferences,” Record told Reuters.

Reporting by Daria Sito-Sucic; Editing by Will Dunham

Our Standards: Thomson Reuters Trust Principles.

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