World Bank Sees Western Balkan GDP Growth at 1.3% in 2015

Six Western Balkan economies will grow an average 1.3 percent in 2015, with Serbia the only country going through a second successive year of economic decline, the World Bank said in its semi-annual report on the region.

The former Yugoslav republic of Macedonia will have the strongest growth in the region of 3.5 percent, followed by Montenegro with 3.4 percent and 3 percent each in Albania and Kosovo. Bosnia-Herzegovina, where floods last year left damage of around 15 percent of its economic output, will grow 1 percent and Serbia’s gross domestic product will contract 0.5 percent.

The six economies will be led by external demand. Domestic consumption will “remain subdued amidst weak consumer and business confidence and despite lower oil prices and household and government efforts to rebuild after the recent floods,” the World Bank said in the report. Close links with the European Union and Russia could further hurt the region if conflict between Russia and Ukraine deepens, according to the bank.

Some of the Balkan countries may see a drop in public support for reforms, deflation will weigh on economic activity, while high non-performing loan levels will constrain lending growth. Limited access to external financing and “prolonged weakness in the euro area all pose risks to a sustained economic recovery,” it said.

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