TIRANA, Nov. 29 – Catching up with the average EU income could take Albania and other EU aspirant Western Balkan economies about six decades unless current sluggish GDP growth doubles to 5 or 6 percent, the World Bank has warned in a recent report.
Growth in the six EU aspirant Western Balkan economies has currently picked up to about 3 percent at a time when the GDP in the EU member states has also recovered to 2 percent.
GDP per capita in purchasing power parity among Western Balkan economies ranges from 10,000 international dollars in Kosovo to about $12,000 in Albania and Bosnia and Herzegovina, about $15,000 in Serbia and Macedonia and $16,800 in Montenegro, according to 2016 World Bank data.
Meanwhile, the GDP converted in international dollars using the purchasing power parity rates is currently three-times higher in the European Union at an average of about $40,000, but ranges from about $19,000 in Bulgaria to about $106,000 in Luxembourg.
“It is important to note that at current growth rates, it would take about six decades for average per capita Western Balkan income to converge to the average for EU residents. With faster growth of 5 to 6 percent, convergence could be achieved in just two decades. That will require a bold and sustained implementation of structural reforms and steady progress in EU accession processes,” says the World Bank.
In its latest Western Balkans report, the World Bank expects the region as a whole to grow between 2.6 to 3.6 percent over the 2017-2019 period with Albania registering one of the region’s highest growth rates.
Meanwhile, the European Commission expects the 27 EU economies to grow between 2 to 2.4 percent by 2019.
“Growth in the EU is trending up, creating an opportunity for Western Balkan countries to reap the growth and stability benefits of deeper trade integration. The higher a country’s trade share with the EU, the higher impact EU growth has on its exports,” says the World Bank.
However, exports of goods and services as a share of GDP average a low 30 percent in the Western Balkans, far below the 80 percent averaged by similar-sized transition economies now in the EU.
In its latest forecast, the World Bank expects Albania’s GDP to slow down from an expected 3.8 percent in 2017 to 3.5 percent in 2019 when two major energy-related projects such as TAP and a big hydropower plant complete.
“To foster confidence and accelerate growth, it will be critical for Albania to speed up reforms to consolidate public finances, improve the efficiency of spending, reduce risks from the energy and financial sectors, and build up the legal system,” says the World Bank.
The Western Balkan region is Europe’s most underdeveloped suffering huge gaps in terms of economic development, rule of law and unemployment compared to Western Europe. Ethnic tensions are frequent especially in Bosnia and Herzegovina, Macedonia and Kosovo.
Only Serbia and Montenegro have currently launched accession talks. Enlargement prospects remain pessimistic in the short and medium-run considering internal developments in the bloc with the Brexit, the migrant and financial crises as well as rising populism high on the agenda.
