All the Western Balkan countries, except Bosnia & Herzegovina, have restored employment to its level before the crisis in 2008 with around 230,000 jobs being created in 2017, the World Bank said in its latest regular report on the region issued on November 16.
The region has relatively high unemployment level with youth unemployment being particularly high.
According to the World Bank’s latest Western Balkans Regular Economic Report, more than half of the new jobs were created in the private sector, mainly in services. Kosovo recorded the highest employment growth in the past 12 months – 8.5%.
“Although unemployment fell across the region, it is still high, ranging from 11.8% in Serbia to 30.6% in Kosovo. In particular, a disproportionate number of the unemployed have been without a job for a considerable time. Youth unemployment is also a concern: more than half of the youth are unemployed in Kosovo, with Albania having the lowest rate in June of 26.4%,” the report reads.
At the same time, the World Bank has revised downwards its economic growth forecast for the Western Balkans to 2.6% in 2017 from the previously expected 3.2%, warning of risks associated with policy uncertainty. GDP growth is expected to accelerate to 3.3% in 2018 and 3.6% in 2019 on the back of increased investment and consumption.
“Domestically, the main risk is policy uncertainty or policy reversals that could affect investment and growth,” the report noted.
It added that economic growth is expected to be driven mainly by private consumption with support from investment and heightened exports.
In Bosnia, growth is seen picking up, supported primarily by domestic demand, while in Kosovo it should be backed by expected expansion in public investment and broad-based exports and production growth. In Macedonia, growth is likely to recover as confidence improves after the political crisis is resolved. In Serbia higher consumption and investment, as well as a recovery in agricultural production should support the GDP growth.
On the other hand, in Montenegro's growth is projected to slow significantly in 2018 and 2019 due to fiscal consolidation measures implemented by the government in order to reduce spending and rein in rising public debt.
Before the 2008 global financial crisis, the six Western Balkan countries – Albania, Bosnia, Kosovo, Macedonia, Montenegro and Serbia - were flooded with cheap capital that fuelled average growth of between 5% and 7% a year.
Growth, jobs, and relatively low inflation helped to reduce poverty in the region, according to the report.
“The combination of economic growth and job creation contributed to a decline estimated at 1 percentage point in the region’s poverty rate, which is projected to be 23.6% for 2017. This implies that about 124,000 people in the region have been lifted out of poverty since 2016,” the report said.