The six Western Balkans countries need six more decades for their income levels to catch up with those of the European Union if economies in the region continue to grow at the average speed achieved between 1995 and 2015, a new World Bank report said on November 30.
The Western Balkans: Revving Up the Engines of Growth and Prosperity report, which was released in Vienna, looks at how Albania, Bosnia & Herzegovina, Kosovo, Macedonia, Montenegro and Serbia can speed up economic growth and achieve faster income convergence with the EU.
“In recent years, the Western Balkan countries have made strides in reforming public finances and rekindling economic growth, but citizens may not yet feel the benefits of this progress,” the World Bank's director for the Western Balkans, Linda Van Gelder, was cited as saying.
She said that focus on structural reforms can speed up economic growth in the six Western Balkans countries.
According to the report, reforms and macroeconomic stability that can enable average growth rates of 5% a year to allow the Western Balkans to converge with the EU in just two decades, instead of six decades.
While average growth in the region of 5%-6% annually in the years before 2008 was faster than both in the EU and worldwide, this growth halved following the global financial crisis - stalling the pre-crisis convergence of countries in the Western Balkans with EU living standards.
“The key, now, is to prioritise policies that can spur private sector investment, help deepen regional integration, and create jobs,” Harald Waiglein, director general for economic policy, financial markets and customs duties at the Ministry of Finance of Austria was cited as saying.
Increasing exports, investments, and employment are all priority areas for policymakers, according to the report.
Stronger regional integration can help raise exports as a share of GDP, which would have to double in order to match those of other small transition economies that are now in the EU.
Private investment in countries where the public sector is still the main driver of the economy will also need to increase.
The report says that low and slow-growing productivity levels in the Western Balkans require improvements in the business environment that can attract private investment and spur enterprise growth.
The jobless rate in the region is almost twice as high as in other small transition economies that are now in the EU, the report concluded.
The World Bank said the key is to increase participation in the labour market in the region as half of the working age population in the Western Balkans is seeking work and a quarter of job-seekers are failing to find it.
“This can be done by addressing disincentives for work, while simultaneously removing barriers to employment faced by older workers, youth, women, and minorities,” the report concluded.