Home Business The World Bank forecasts growth in the Western Balkans economy of 3.4% in 2022 and 2.8% in 2023

The World Bank forecasts growth in the Western Balkans economy of 3.4% in 2022 and 2.8% in 2023

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Aerial view of Sarajevo, Bosnia and Herzegovina on June 07, 2021. The photo is taken with a drone. REUTERS/Dado Ruvic/file photo Acquire license rights

SARAJEVO, Oct 24 (Reuters) – The World Bank on Monday raised its 2022 economic growth forecast for six Western Balkan countries to 3.4% from 3.1% previously, but warned it was still affected by the war in Ukraine and the resulting inflation and slowdown. in global growth.

Economic growth driven by private consumption and investment proved robust in the first half of 2022, while employment reached historic highs and now averages 46%, an increase of 3 percentage points per year. report by mid-2021, with services contributing to the recovery of the labor market, the bank said in a regional report.

“Even though growth in the first half of 2022 proved relatively robust, it is clear that the region is now heading for a new storm,” said Sanja Madzarevic-Sujster, senior economist at the World Bank.

The bank lowered its 2023 growth estimates for Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia by 0.3 percentage points to 2.8%, citing prospects of a continued high inflation, a loss of consumer and investor confidence, tighter financing conditions and strains on global supply chains.

Rising energy and food prices have pushed inflation to levels not seen in many years, eroding purchasing power and business confidence. Food inflation reached up to 25% in Bosnia, Montenegro and North Macedonia, according to the report.

The bank expects inflation, which it estimates at 10.9% in 2022, to remain in double digits in all Western Balkan countries except Albania and fall to 6. 4% in 2023.

Additionally, the labor market is starting to calm down, with employment slowing amid high inflation and increased uncertainty.

The bank warned of the possibility that the number of poor people in the region could increase by 13% due to rising food and energy prices, unless governments act to cushion the severity of the price shocks.

Policymakers should promote reforms that would boost growth in the medium term with limited fiscal costs, including measures to increase the level of market competition, remove barriers to business entry, and increase retention and reinvestment from foreign investors, the report said.

Reporting by Daria Sito-Sucic; Editing by Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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