Economic growth in the Western Balkans is anticipated to moderately accelerate through 2025, as per the latest report by the World Bank. The report suggests that increased consumption and investment, along with enhanced purchasing power, are key factors driving this growth.
The World Bank projects a collective economic growth of 3.7% for Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia in 2025. This marks an upward revision of 0.2 percentage points from earlier forecasts. Growth for 2024 is expected to reach 3.3%, up by 0.1 percentage point from initial estimates.
"Domestic factors continue to support a moderate acceleration of growth in the Western Balkans," said Isolina Rossi, an economist at the World Bank and lead author of the report. "In addition, in the medium term, the gradual recovery of economic activity in the European Union is expected to play a crucial role by bolstering exports from the region."
As economic growth strengthens in the Western Balkans, living standards are gradually converging with those of more advanced European Union economies. However, maintaining this momentum requires structural reforms aligned with the European Union’s Growth Plan.
"Economic integration is a key driver of growth for small economies such as those in the Western Balkans," stated Xiaoqing Yu, World Bank Country Director for the region. Yu emphasized enhancing regional and EU trade and addressing demographic challenges through human capital development as essential steps toward achieving high-income status.
With nearly one-fourth of individuals from the Western Balkans residing abroad, managing this global workforce effectively could be pivotal for regional economic development. While emigration poses challenges like labor shortages, it also presents opportunities for economic benefits.
The report highlights that effective migration management can alleviate poverty and stimulate exports while attracting investment. Remittances can improve financial resources for migrant households, while returning skilled migrants contribute to 'brain gain.' Moreover, higher wages abroad can motivate education and skill enhancement domestically.
To maximize migration benefits, several policy actions are recommended:
- Developing skills training and mobility programs with destination countries.
- Enhancing migrant protections during their migration journey.
- Facilitating capital transfer and expertise from diaspora members.
- Utilizing digital tools for effective migration management.
For further details on previous editions of the Western Balkans Regular Economic Report, readers can contact representatives across various cities including Vienna (Filip Kochan), Belgrade (Gordana Filipovic), Pristina (Lundrim Aliu), Skopje (Anita Bozinovska), Sarajevo (Jasmina Hadzic), and Tirana (Ana Gjokutaj).