Western Balkans Regular Economic Report No. 15, Spring 2019 : Reform Momentum Needed
The Western Balkans economies are projected to continue to expand in 2019–20, but this stable outlook is vulnerable to risks. In 2018 economic growth in the Western Balkans reached 3.8 percent, supported by increased public spending, and in Albania...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/219231554130333324/Reform-Momentum-Needed http://hdl.handle.net/10986/31506 |
| Summary: | The Western Balkans economies are
projected to continue to expand in 2019–20, but this stable
outlook is vulnerable to risks. In 2018 economic growth in
the Western Balkans reached 3.8 percent, supported by
increased public spending, and in Albania and North
Macedonia also by a rise in net exports. Growth is projected
to average 3.7 percent for 2019–20, faster than the EU and
similar to the average for Central and Eastern Europe (CEE).
Growth will differ by country, accelerating in Bosnia and
Herzegovina, Kosovo, and North Macedonia while decelerating
in Albania, Montenegro, and Serbia. Factors common to all
countries are the recent fiscal stimuli and favorable
external conditions that pushed growth in 2018, beyond its
potential in some of them. The waning effects of these
factors challenges the medium-term growth outlook in the
region. Moreover, there is growing public discontent in
several countries which could lead to higher political
uncertainty and a slower pace of structural reforms. In
North Macedonia, by contrast, the resolution in early 2019
of the decades-long dispute with Greece over the country’s
name is an opportunity to advance reforms, accelerate EU
accession, and become more integrated in global markets.
Western Balkan countries are also confronted with growing
external risks from slower-than projected growth in the EU,
geopolitical and trade disputes, and a possible tightening
of financing conditions in international capital markets.
Against this backdrop, there is anopportunity to advance
reforms to mitigate risks and the demands for greater
economic opportunities. This report features a special focus
section on human capital development. The region has
achieved notable progress in expanding access to basic
education and health and setting up social protection
systems to protect the vulnerable. This Focus Section
explores how Western Balkan societies can be better prepared
to take advantage of the opportunities offered by rapid
technological changes, mitigate risks, and create dynamic
growing economies where young people can thrive and realize
their aspirations. Unaddressed, the region’s human capital
challenges will severely limit the region’s prospects for
growth and poverty reduction. For instance, too little
investment in early childhood development translates into
poor performance in primary and secondaryeducation in some
countries. In school, students in some countries do not
acquire the skills they need to function effectively as
labor markets become ever more competitive. Poor quality
technical and university education makes the transition from
school to work difficult; many graduates who suffer years of
unemployment cannot build work experience. Social assistance
programs also do not give vulnerable households the support
they need to prepare them for the labor market. Inefficient
health systems are unable to address the rise of
noncommunicable diseases, and individual out-of-pocket
spending on health is high. In general, countries in the
region must act boldly to build human capital. |
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