Western Balkan countries prove more resilient than expected
WESTERN BALKANS. The European Bank for Reconstruction and Development (EBRD) has raised its growth forecast for Western Balkan countries to 6.4% in 2021, from 5.1% in a previous estimate in June 2021.
Released on Thursday, November 4, 2021, the latest Regional Economic Outlook (REO) report explains this gap by a good performance in the first half of the year with growth in exports and industrial production boosted by the recovery in the European Union. The good summer tourist season has also borne fruit, particularly in the hotel sector for Albania, Kosovo and Montenegro. Expanding household consumption, driven by increased remittances, rising nominal wages and credit growth in most economies in the region are also contributing to this improved growth. “Fiscal policy has remained accommodative and key monetary rates are at historically low levels to support the economy,“says the study.
However, there are grains of sand that could undermine this positive dynamic. In particular, the EBRD warns that “inflationary pressures (could) hamper future recovery“. As in most of the regions covered by the bank, consumer prices have been gradually increasing since early 2021, due to rising food and energy prices.While signs of economic recovery in the Western Balkans have been strong so far, significant uncertainties remain, especially those related to the future trajectory of the pandemic and the potential worsening external conditions.“, comments Ana Krešić, EBRD regional economist for the Western Balkans.