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BUCHAREST (Romania), November 22 (SeeNews) - The World Bank said on Tuesday Serbia's sharp economic upswing would drive GDP growth in the entire Western Balkans region in the short term.
The GDP growth projection for the Western Balkans, an area comprising non-EU Albania, Bosnia and Herzegovina, Montenegro, Macedonia and Kosovo, is 2.7% in 2016, 3.2% in 2017 and 3.5% in 2018, the World Bank said in its Europe and Central Asia (ECA) economic update presented in Bucharest.
"The Serbian economy benefited from increases in domestic investment and continued strong foreign demand in 2016," the World Bank said. "An increase in investment is expected to be the main driver of growth in 2016 and 2017, while recovery of consumption is expected to lead the growth in outer years of the projections period."
The World Bank forecasts Serbia's GDP growth at 2.5% in 2016, 2.8% in 2017 and 3.5% in 2018. However, Serbia needs to carry out structural reforms to ensure faster growth of the economy and the creation of new jobs, the World Bank said.
On the other hand, the World Bank expects the Central Europe region, which includes Romania, Slovenia, Bulgaria and Croatia among others,
to experience the largest decline in economic growth rate among the continent's subregions.
Yet, GDP in the Central Europe region is still forecast to increase by 4.1% in 2016, 3.6% in 2017 and 3.4% in 2018.
Romania is expected to have the highest GDP growth rate of 5.1% in Southeast Europe (SEE) in 2016, boosted by the reduction in the standard VAT rate to 20% in January 2016 and labour market improvements. Investment growth remained robust at 7.3% due to strong private sector activity. After years of fiscal consolidation and solid growth, Romania has achieved a sound macroeconomic position with a moderate level of public debt, the World Bank said.
Details about the expected GDP growth of countries in SEE follow (pct change):
|Bosnia and Herzegovina||2.8||3.2||3.7|
The World Bank's 2016 “Polarization and Populism” ECA Economic Update covers 24 countries from the European Union, the Western Balkans, Eastern Europe, South Caucasus and Central Asia. It measures the effect on the rising inequality, slow growth since the financial crisis, and structural changes in the labour market on the economic growth in the regions above.