World Bank expects stronger exports to lift Western Balkans growth to average 3.1% in 2026-27

SARAJEVO: Economic growth for six Western Balkans countries is projected to increase to 3.1% on average in 2026 and 2027 on stronger exports and public investment after a slowdown last year, the World Bank said on Wednesday.

Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia are forecast to collectively grow by 2.9% this year and 3.2% in 2027, with infrastructure projects funded by the European Union and other public investment expected to offset the likely moderation in consumption growth, the lender said.

While robust services exports, especially tourism and information and communications technology will also fuel growth, consumption growth will cool as wage gains slow and investment weakens due to a fading tourism-led construction boom and softer foreign direct investment (FDI) inflows.

Developing countries in Europe, Central Asia face slowdown, World Bank says

The energy price shock due to the war in Iran is expected to fuel inflation, disproportionately affecting poorer households, reducing real wage growth and slowing the pace of poverty reduction, the bank said in a report.

It added the countries of the Western Balkans, which all aspire to join the EU, could use industrial policies such as a green transition to strengthen their energy security and align their energy sectors with the EU electricity integration package.

Governments of the region, where most countries remain heavily dependent on coal-fired power generation, need to actively engage in the transition, supporting economic diversification in areas where entire local economies are built around extractive and heavy industries, the bank said.