Western Balkans’ economic growth accelerates, but with a risk: WB

BELGRADE, Oct. 4 (Xinhua) — The around 3.5-percent growth of Serbia and other Western Balkan countries takes place at a moment when numerous political risks and uncertainties turn local and foreign investors cautious, according to a new annual World Bank report presented here Thursday.
The Western Balkans Regular Economic Report said that the growth for the Western Balkan region is estimated to accelerate to 3.5 percent for 2018, while Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia will grow at rates between 2.5 percent and 4 percent each.
The report notes that the World Bank’s estimations count on Serbia’s success in reforming some of the biggest state enterprises and banks by the end of the year, while it also voices concerns because of recent increase in external deficit and its implications on foreign debt.
“The risk can be worsened by the possible sharpening of external conditions in emerging markets, slowing down of growth within the EU and the prospect of joining, as well as other regional and political developments,” said Lazar Sestovic, representative of the World Bank in Belgrade.
According to the report, in the medium-term, Serbian economy is expected to register a growth of about 4 percent, as these projections are largely dependent on the dynamics of structural reforms and progress on EU accession.
Although in the first half of 2018, Serbia achieved a 4.9 percent growth, a constant threat of early elections, the recent resignation of the minister of finance, work on resolving the issue of Kosovo and Metohija, slower-than-expected opening of the European Union acquis chapters, the lack of formal engagement with the International Monetary Fund, the deterioration of indicators relating to governance and the rule of law in the country — “all of these suggests that growth could have been faster,” says the report.
In addition, the uncertainty generated by regional political events, the possible tightening of the financial conditions for developing markets in general, and the concerns about the speed of growth in the EU, make local and foreign investors more cautious.
This could therefore delay the completion of some important infrastructure projects, the report reads.
The report also calls for domestic reforms that unleash private investment and exports, “greater economic integration to promote higher, sustained growth and stimulate job creation, as well as increased integration between Western Balkan counties focusing on trade, investment, mobility, and digital integration” in order to accelerate growth, overcome small and fragmented national markets, and ensure long-term economic stability.