BELGRADE (Serbia), April 29 (SeeNews) – The World Bank expects the regional gross domestic product (GDP) of the Western Balkans to decline by between 3% and 5.6% in 2020 due to the impact of the novel coronavirus (COVID-19) pandemic, it said on Wednesday.
"The recession in all Western Balkan countries will be driven by a significant drop in both domestic and foreign demand during the pandemic," the World Bank said in a press release, following the presentation of its latest semiannual Western Balkans regular economic report, spring 2020.
Travel restrictions and social distancing measures have a particularly protracted impact on tourism and services, the latter accounting for around 50% of total employment in five countries in the region and 75% in Montenegro, the World Bank said. "Supply-side disruptions and lower demand further affect many manufacturing sectors, while liquidity constraints and acute uncertainty stifle investment," it added.
"The magnitude of the recession depends on the duration of the pandemic in Europe. While the economic impact of the ongoing pandemic in the region is difficult to forecast, there is little doubt that this pandemic is wreaking havoc on lives around the region - taxing health care systems, paralysing economic activity, and undermining the wellbeing of people," Linda Van Gelder, World Bank Country Director for the Western Balkans, said.
The main risk for the Western Balkans is that a prolonged pandemic, as well as a deeper recession in the European Union, could make the unfolding economic crisis difficult to handle, the World Bank said.
"Over the medium-term, growth is expected to rebound strongly in the region, as economic activity gradually returns to normal, but this also depends on the length and intensity of the current crisis, as well as what steps policymakers take to address this pandemic," Van Gelder noted.
Real GPD growth projections for the Western Balkans in 2020 follow (percentage change). The World Bank uses a baseline scenario and a downside scenario in the face of high uncertainty brought on by the pandemic:
|
Pre-COVID-19 |
Baseline |
Downside |
Albania |
3.3 |
-5.0 |
-6.9 |
Bosnia and Herzegovina |
3.4 |
-3.2 |
-4.2 |
Kosovo |
4.1 |
-4.5 |
-11.3 |
North Macedonia |
3.6 |
-1.4 |
-3.2 |
Montenegro |
3.2 |
-5.6 |
-8.9 |
Serbia |
3.9 |
-2.5 |
-5.3 |
Western Balkans |
3.7 |
-3.1 |
-5.7 |