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TIRANA (Albania), October 4 (SeeNews) – The gross domestic product (GDP) growth in the Western Balkans is expected to accelerate to 3.5% in 2018 and 2019 and further to 3.8% in 2020, from 2.4% in 2017, the World Bank said on Thursday.
In most of the region, growth projections for 2018 have been revised upward, the World Bank said in its Regular Economic Report Fall 2018.
“Across the region we are seeing growth supported by public investment and spending,” Linda Van Gelder, World Bank regional director for the Western Balkans said in a statement, following the publication of the report.
“Countries that saw their private investment increase also saw faster growth. Although untargeted social spending and public wages have had a positive impact on growth in the short-term, they increase fiscal vulnerabilities. Increasing private investment and exports is a more sustainable way to grow,” she added.
According to the revised projections for 2018, the economies of Kosovo and Albania are expected to grow by 4% each.
“At 3.8%, Montenegro’s growth is projected to be 1 percentage point higher, although still lower than last year. Growth in Bosnia and Herzegovina continues to be stable at an estimated 3.2%. Serbia’s economy has rebounded to 3.5% growth after last year’s weather-related slowdown. Macedonia’s growth also rebounded to 2.5%, as investor confidence was restored,” the World Bank said.
Growth in Western Balkan countries was stimulated by higher public investment and consumption and over 90,000 jobs were created in the first half of 2018, with new employment mostly in industry and services.
However, the overall labour market response to growth was slower than it could have been, reflecting the temporary nature of consumption-led stimuli as well as a rise in labour inactivity, the World Bank noted, adding that in some countries, inactivity and emigration rather than new job creation explain the fall in unemployment.
According to the report, sustaining long-term growth requires domestic reforms that unleash private investment and exports.
The report also calls for greater economic integration to promote higher, sustained growth and stimulate job creation.
“Increased integration between Western Balkan counties focusing on trade, investment, mobility, and digital integration is needed to accelerate growth, overcome small and fragmented national markets, and ensure long-term economic stability.”
Real GPD growth in the Western Balkans (percentage) follow:
|Bosnia and Herzegovina||3.0||3.2||3.4||3.9|
Source: Central banks and national statistics offices; World Bank estimates and projections