2024-11-10-世界银行-西巴尔干定期经济报告第26号_2024年秋季_保持增长势头（英）_112页_3mb

Western Balkans Regular Economic Report No. 26 - Fall 2024

Retaining the Growth Momentum

Overview

The economies of the Western Balkans (WB6) are navigating a complex environment, with growth projected to accelerate to 3.3% in 2024 from 2.6% in 2023, driven primarily by domestic demand. Uncertainty persists due to external factors, including sluggish EU growth and trade.

Growth Acceleration Supported by Strong Domestic Demand

• Key Drivers: Domestic consumption and investment expansion, supported by declining inflation and wage increases. Inflation is decelerating but remains sticky, while credit growth is rebounding, aiding consumption and investment.
• Challenges: Exports underperformed relative to potential, partly due to weak external demand. The risk of excessive wage growth vs. productivity could strain fiscal sustainability.

Solid Growth Driving Employment in 2024

• Labor Market: Employment rates reached historical highs in the WB6, boosted by growth in construction, services, and public sector jobs. Serbia and Albania saw the largest nominal employment gains.
• Youth Unemployment: Remains a concern, particularly in Bosnia and Herzegovina, reflecting structural issues in education and job market alignment.

Closing Gender Disparities

• Productivity and Poverty: Gender employment gaps reduce human capital utilization, limiting productivity gains. Targeted reforms, including female labor force participation through childcare and social protection, are essential for poverty reduction and inclusive growth.

Maintaining Fiscal Prudence

• Fiscal Challenges: Post-consolidation, deficits are widening due to increased spending on social benefits, wages, and capital expenditure. Rising debt levels and borrowing costs pose risks, necessitating careful fiscal management, especially around elections.
• Debt Management: Public debt remains elevated, requiring adherence to fiscal rules and potentially leveraging diaspora resources and EU funds.

Inflation Continuing to Decelerate (Slower Pace)

• Global disinflation dynamics influenced WB6's inflation trends. Headline inflation decreased, but core inflation remains elevated, driven by wages and services. Central banks have initiated cautious easing amid persistent price pressures.

Financial Stability Amidst Uncertainty

• Credit Growth: Credit expanded significantly in 2024, supporting households and businesses, though asset quality stabilized. Strong capital buffers enhance resilience.
• Remittances and Services: Current account deficits widened, financed largely by net FDI inflows, highlighting reliance on external capital.

External Deficit Widening Amid Continued External Pressures

• Balancing Act: External imbalances intensified, driven by lower EU growth, energy costs, and diminished remittances. Improving export diversification (e.g., IT services, tourism) is key to reducing current account vulnerabilities.

Growth Outlook: Diverging Growth Drivers

• Regional Projections: Growth is moderately higher than spring forecasts, particularly in Serbia and Bosnia and Herzegovina, with consumption and investment playing more significant roles post-pandemic.
• Convergence Challenges: Serbia leads with higher growth, while others lag in convergence with the EU, requiring structural reforms to enhance productivity and sustainability.

Spotlight: Reaping the Benefits of a Global Workforce

• Migration Dynamics: Emigration reduces labor supply but provides remittances, enhancing household incomes. Diaspora engagement and skill development programs (e.g., Heimerer College in Kosovo) offer pathways to reverse brain drain.
• Integration and Inclusion: Leveraging SEPA membership and digitalization can ease cross-border payments, attracting foreign investment and boosting market integration.

Key Priorities for Action

1. Boost Human Capital: Focus on education quality, reskilling, and women's workforce participation to enhance productivity.
2. Fiscal Discipline: Ensure fiscal sustainability through independent fiscal councils, transparent revenue collection, and prudent public spending.
3. Green Transition: Mobilize adaptation investments (€37.2B by 2050) and align policies with EU sustainability standards to meet net-zero goals.
4. Migration Management: Strengthen bilateral labor agreements, improve remittance corridors, and integrate diaspora resources into national development strategies.

Conclusion

The WB6 region must balance fiscal prudence with growth-enhancing investments, deepen EU integration, and harness migration and innovation to achieve sustainable convergence and inclusive prosperity.