By Judith Ugwumadu | 10 December 2013
Six south east European economies are facing a slow road to recovery next year because of higher borrowing costs and limited export growth, the World Bank said in a report issued yesterday.
The bank has revised down its growth projections for the SEE6 region from 2.7% to 1.8%, saying its nations – Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia – are dealing with ‘depressed [domestic] demand, uncertain export prospects and significant external risks’.
The short-term growth prospects for the six countries remain frail, the World Bank said in its South East Europe Regular Economic Report presented in Belgrade. This is despite a bounce-back in the region’s economy in the first half of 2013, led by an improved export performance. But near-term economic growth will still not be strong enough to support substantial gains in employment in the short-run. The region is also experiencing high unemployment, sluggish household-income growth and a difficult investment climate, the bank said.
Satu Kahkonen, manager for macroeconomic and poverty reduction work in the SEE, ‘The SEE countries need to continue to prioritise strengthening their domestic macroeconomic fundamentals and policies that boost their productivity and resilience to external turmoil.
‘The nascent export-led growth of 2013 is a positive development, but sustaining it will be a challenge. In addition to the need to improve their fiscal positions, decrease public debts, and strengthen their banking systems, the SEE6 countries face significant structural challenges in improving productivity and competitiveness, including in the areas of the investment climate, the labour market, and the public sector.’
