Southeast European growth to remain sluggish, says IMF

By bne IntelliNews October 7, 2015

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According to the International Monetary Fund’s autumn World Economic Outlook, economic growth in the Southeast Europe region will be mixed, with many countries' projected GDP growth rates revised down for 2015 and 2016.

Romania was the standout achiever, with the country’s GDP expected to accelerate to 3.4% y/y in 2015 and 3.9% y/y in 2016, revised upwards from 2.9% and 2.7% respectively in the IMF’s last report in April. This would be the highest growth rate among European economies in 2016.

Serbia's 2015 forecast changed from a 0.5% contraction anticipated in the IMF’s April report to a 0.5% growth rate, and a 2016 growth rate of 1.5%. This was in line with the positive assessment given to Serbia in September following the IMF’s second review of its €1.2bn three-year stand-by arrangement with the country agreed in February.

Bosnia's economy is now expected to grow by 2% in 2015, accelerating from a 1.1% rise in 2014, but revised down from 2.3% in the April edition of the report. This expected growth rate puts Bosnia among the worst performers in what the IMF calls emerging and developing Europe, ahead of only Bulgaria, Croatia and Serbia.

Despite its low expected levels of growth, Bulgaria was one of the countries where expected growth was revised upwards. The IMF raised its forecast for Bulgaria’s 2015 GDP growth to 1.7%, up from 1.2% projected in April. Meanwhile 2016 growth was also revised up – to 1.9%, from 1.5%. This was because of better-than-expected performances in the first half of the year, when the country's economy expanded by 2% y/y in Q1 and 2.2% y/y in Q2.

Croatia also had a rise, albeit from the 0.5% GDP growth rate projected in April, to 0.8%. Croatia remains an underperformer in the emerging and developing Europe group, and in 2016 the Adriatic country is expected to post the smallest growth in the group (accelerating just 1%). The fund also expects Croatia’s unemployment rate to remain high, with the jobless rate falling to 16.6%, from 17.1% last year, and dropping to 16.1% in 2016.

Montenegro's economy is now expected to grow 3.5% in 2015, speeding up from 1.5% in 2014, but less than the IMF’s 4.7% estimate made in April. The forecast is significantly below the government’s expectation that its economy will expand by 4.3% this year thanks to strong investment activity.

Meanwhile Kosovo’s economic growth in 2015 was revised down to 3.2%, from 3.3% previously, though the country is still expected to have the strongest GDP growth among the six Western Balkan countries, alongside Macedonia and Montenegro. In 2016, the IMF expects Kosovo's economy to expand by 3.8%.

Macedonian growth was revised down to 3.2%, from the 3.8% projected in April, and from 3.9% to 3.2% for 2016. The Albanian forecast was cut to 2.7% for 2015, from 3% previously, and the country’s GDP growth for 2016 was downgraded from 4% to 3.4%.

Moldova was the only country in the region forecast to have an actual fall in GDP, by  1% y/y, for 2015, but it is expected to recover to 1.5% y/y growth in 2016, and further accelerate to 4% y/y in 2020, reflecting the country’s current uncertainty but medium-term potential.

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