TIRANA, Sept. 28 – The World Bank’s latest South East Europe Regular Economic Report says that the economic activity in the six South East European countries is picking up speed, and growth in the region is expected to average 1.8 percent in 2015, compared to only 0.3 percent in 2014.
The report says economic growth throughout the region is stimulated by recovery in domestic demand and developments in the global economy.
The highest growth rates projected for 2015 are 3.4 percent for Montenegro and 3.2 percent for Macedonia; the lowest is Serbia’s 0.5 percent. Although lagging behind rest of the SEE6 region, Serbia and Bosnia and Herzegovina are recovering faster than expected from the floods of 2014.
The economic recovery has encouraged job creation, and employment throughout the region is slowly picking up, with Serbia and Macedonia reaching highest employment rates since mid-2009. Yet, unemployment remains a key structural challenge; especially for the young. Structural issues such as labor market, competitiveness, public finances, must be tackled so that the SEE6 countries can accelerate growth and restart their EU convergence process which was stalled since the 2008 global financial crisis.
“Carefully prioritizing economic policies is essential for managing risks to the economic outlook of the region,” said Gallina Vincelette, one of the authors of the report. “Sustained reforms are needed to ensure macro-fiscal sustainability, particularly as financing conditions tighten, and to expand the space for using fiscal policy to mitigate future shocks.”
Attention of policymakers in the region, and in the EU, has also turned to the challenge of rising transit migration through the region.
The current refugee flow may also impact the potential for out-migration from SEE6 to EU member states going forward, with important implications for labor markets and remittances at home.
“Creating incentives for greater labor force participation, investing in human capital, reversing the trends of high emigration, and creating income generating opportunities at home will help motivate young individuals to stay or return from abroad,” said Ellen Goldstein, World Bank Country Director for South East Europe “thereby not only addressing the challenge of aging but also increasing the quality and quantity of human capital in the Balkans.”
