World Bank expects six Western Balkan economies to grow 3.2% collectively in 2025

Economic growth in the six Western Balkans countries is projected to moderately slow in 2025 due to weaker external demand and global economic uncertainty, the World Bank said in a bi-annual report made public on Monday. Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia will collectively grow 3.2% in 2025, 0.5 percentage points below the bank's previous projections, the report said. The region's growth is expected to accelerate to 3.5% in 2026.   "We are seeing some positive economic trends in the Western Balkans that underscore the region's resilience and should underpin firm economic growth," with lower inflation and rising wages supporting consumption and public investments picking up, said Xiaoqing Yu, the World Bank division director for the Western Balkans. Yu said that several countries were facing increased domestic uncertainty and that slower economic activity in the European Union and heightened global trade uncertainty could negatively impact the growth outlook in the region, reducing trade in goods and services and investments and remittances.   The report said the region's economies should diversify growth sources and renew their structural reform agenda, including the elimination of labor market barriers to maintain economic resilience. Faster implementation of EU accession reforms, such as joining the Single Euro Payments Area (SEPA) and introducing "green lanes” to streamline cross-border trade, could further enhance business confidence, attract investment and spur job creation, the report said. As the six countries experience rising temperatures and extreme weather events, coupled with the transition to a low-carbon economy, they should start reforming their social protection systems and employment services to help their labor forces cope and prepare for new employment opportunities driven by the green transition, the report said.