Public Investment Boosts Growth in Western Balkans

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The FINANCIAL — Growth for the Western Balkan region is estimated to strengthen to 3.5 percent for 2018, according to the latest Western Balkans Regular Economic Report, Higher but Fragile Growth. Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, and Serbia are estimated to grow at rates between 2.5 percent and 4 percent.

While employment also rose in five of the six countries in the region, the 91,400 new jobs created between July 2017 and July 2018 were significantly fewer than the 214,000 added one year earlier. Most new jobs are appearing in the industry and services sectors, according to The World Bank.

In most Western Balkan countries, high and rising public debt is coupled with fiscal and external imbalances, making the outlook vulnerable to an increase in financing costs should financial markets tighten. Sustaining long-term growth thus 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.

 

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