SARAJEVO (Reuters) -Economic growth for six Western Balkans countries is projected to slightly increase in 2026 on stronger exports and investment after a slowdown this year, the World Bank said on Tuesday.
Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia are forecast to collectively have economic growth of 3.1% in 2026 and 3.6% in 2027.
That would follow a likely expansion of 3% this year – much weaker than 3.6% in 2024 and 0.2 percentage points below an earlier prediction, the report said, noting there had been high inflation and constraints on trade and investment.
The region’s fiscal policy remained disciplined despite robust wage and credit growth, with their combined deficit below 3% of GDP and public debt going down, the report said.
That said, the region must focus on generating quality jobs to sustain its convergence with the European Union.
“To help the region become a modern economy, it’s important to rethink jobs strategies – such as encouraging greater labor market participation, improving skills of the population and boosting firms through digital upgrades,” Xiaoqing Yu, the bank’s division director for the Western Balkans, said in the report.
The report said that in the Western Balkans labour market, shortages of workers in some sectors persist despite high unemployment rates. It noted that labour force participation, particularly among women, youth and older adults, was low.
The bank warned that the region will face demographic challenges as the working-age population has declined and is projected to shrink by about 20% by 2050. It forecast a possible shortfall of more than 190,000 workers over the next five years if current trends continue.
The Western Balkans should invest in infrastructure as well as strengthen education and health systems to increase labour force participation, the report said.
Private sector investment could be boosted by fostering competition in key sectors such as energy and transport, reforming state-owned companies, streamlining regulations and supporting innovative start-ups, it added.
(Reporting by Daria Sito-Sucic; Editing by Edwina Gibbs)
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