Publication: Western Balkans Regular Economic Report No. 27, Spring 2025: Adapting for Sustainable Growth
Loading...
Date
2025-04-29
ISSN
Published
2025-04-29
Author(s)
Editor(s)
Abstract
The Western Balkans Regular Economic Report highlights the significant impact of extreme climate events on labor markets in the region. Rising temperatures, heavy precipitation, and other severe weather events are exacerbating existing vulnerabilities and creating new challenges for both workers and employers. These climate changes, combined with the global shift towards a low-carbon economy, are reshaping employment patterns in key sectors such as energy, agriculture, and tourism. Direct climate impacts, including heat stress, droughts, and floods, are affecting workers, their families, and businesses. Additionally, structural shifts in employment demand and skills requirements are emerging. For instance, areas dependent on tourism in the Western Balkans are increasingly susceptible to extreme weather events, which can lead to a decrease in visitor numbers, disrupt revenue streams, and threaten local jobs. Looking forward, the changing climate and the transition to a greener economy will necessitate significant workforce adaptation. This includes reforms to social protection systems and employment services to better safeguard individuals and facilitate labor market transitions. These measures are essential to protect people and support the evolving demands of the labor market in response to climate change.
Link to Data Set
Citation
“World Bank. 2025. Western Balkans Regular Economic Report No. 27, Spring 2025: Adapting for Sustainable Growth. © World Bank. http://hdl.handle.net/10986/43132 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Western Balkans Regular Economic Report, No.22, Fall 2022(Washington, DC, 2022-10)The economies of the Western Balkans continue to face a turbulent external environment, placing households, firms, and governments under acute stress. Just as the post-COVID recovery of 2021 began to fade and the region returned to a normalized rate of economic growth, the Western Balkan region now faces a new combination of challenges. The war in Ukraine, and the resultant sharp increase and energy prices and slowdown in global growth, is weighing on economic performance in all six economies. Higher energy and food prices have pushed inflation to levels unseen for many years, eroding purchasing power and business confidence. Monetary tightening in advanced economies is pushing up financing costs and weakening external demand. Following a strong rebound in 2021, growth, although still robust, was on a decelerating path in the first half of 2022. In Q1 of 2022, the Western Balkan economies remained resilient overall, supported by sizable policy actions at the EU, euro area, and national levels. First-quarter growth was particularly strong in tourism-based economies and in Serbia. However, growth decelerated in Q2, as countries had to deal with the direct consequences of the war and is projected to continue decelerating in the second half of the year reflecting higher base levels of growth in Q3 and Q4 2021 and the stronger global headwinds.Publication Western Balkans Regular Economic Report No. 25, Spring 2024(Washington, DC: World Bank, 2024-04-11)Economic growth in the Western Balkans slowed to 2.6 percent in 2023, from the 3.4 percent reached in 2022, reflecting the impact of a weak European economy weighed down by sequential shocks. Overall, the WB6 region has experienced a rise in total hours worked driven by employment growth and labor force expansion, especially driven by women joining the labor force. Poverty in the Western Balkans returned to its declining trend during 2023, but at a slower pace than pre-pandemic. A robust fiscal performance and solid rate of gross domestic product (GDP) growth led to a fall in debt as a share of GDP. After increasing to levels not seen in several decades, inflation rates in the WB6 fell significantly during 2023. Growth projections for the medium term have increased slightly, reflecting cautious optimism that, having weathered a flurry of shocks over recent years, the Western Balkans is beginning to see a return to trend economic performance. However, while the WB6 region is expected to return on its pre-pandemic trend in 2024, this is insufficient to enable meaningful convergence with European Union (EU) income levels over the medium term. The spotlight in this edition of the Western Balkans Regular Economic Report focuses on the role of cities as engines of growth and leading actor in the green transition. This spotlight recommends action on three main fronts to make cities in the Western Balkans greener. First, it is crucial to reduce urban sprawl and make cities more compact. Second, cities must bring down their emissions, also because this will have immediate improvement on socio-economic and environmental outcomes. And third, cities must take actions to reduce extreme urban heat and enhance preparedness for it.Publication Western Balkans Regular Economic Report No.23, Spring 2023(Washington, DC: World Bank, 2023-06-16)The six countries of the Western Balkans have seen their resilience tested over the last three years. Growth in the Western Balkan economies started strong in early 2022, before moderating toward year-end, but the impact of major shocks, such as electricity and heating outages, has been less severe than expected. Inflation surged to a two-decade high in 2022 in almost all economies, and price pressures remain elevated in early 2023. Higher food and energy prices have affected low-income households especially severely, resulting in a much slower pace of poverty reduction in 2022 despite universal government support. In the medium term, the Western Balkans continues to have a positive outlook, but reforms are needed to rebuild buffers, accelerate the green transition, and to address key structural challenges. The ongoing energy crisis has highlighted the need to accelerate the green transition across Europe, including in the Western Balkans. A key starting point in this regard is to accelerate the move toward carbon pricing and to increase the use of environmental fiscal measures that incentivize households and firms to shift toward lower carbon intensity with respect to economic activity.Publication Western Balkans Regular Economic Report No.24, Fall 2023(Washington, DC: World Bank, 2023-10-19)In the context of weakening global demand, growth in the Western Balkans decelerated over the course of 2022 and into 2023. Against the background of the lasting effects of shocks from Russia’s invasion of Ukraine, sticky inflation, and tighter financial conditions, global demand has been weakening, and this has a divergent impact across the Western Balkans (WB6). On the one hand, the slowdown in global demand contributed to weaker-than expected performance of industrial production in the whole European Union (EU) region and in the WB6. On the other hand, global demand has proved more resilient in services and, for travel, with twice as many people traveling globally during Q1 2023 as in the same period in 2022 (UNWTO). This has particularly benefited Albania, Kosovo, and Montenegro, where services exports have reached new record highs. In contrast, weakening global demand for goods has weighed on Bosnia and Herzegovina (BiH), North Macedonia and Serbia. On the demand side, private consumption remained in general an important growth driver, despite rising price pressures. Reforms are needed to consolidate the recovery toward sustainable growth, while negotiations with the EU hold the potential to bolster prospects in the Western Balkans. As the WB6 agriculture sector is undergoing a major structural transformation, efforts to green agriculture are also important to ensure access to the EU market and for the competitiveness of agriculture, rural development, and food and nutrition security. Most WB6 countries have recently included agriculture greening in their development strategies. Historically, the environmental footprint of the WB6 agriculture sector has been relatively low. But this has been more an unintended outcome of still high rurality and low farming intensity rather than a result of public policy and expenditure choices. Agricultural public expenditures, while substantial in terms of amounts and adequate to influence agricultural production, have not yet prioritized financing of greening and climate-smart agriculture. It is important for the WB6 countries to accelerate greening of their agriculture by learning from the EU’s green transition and better utilization of the existing public funds available for agricultural development.Publication Western Balkans 6 Country Climate and Development Report(Washington, DC: World Bank Group, 2024-07-16)This Regional Western Balkans Countries Climate and Development Report (CCDR) stands out in several ways. In a region that often lacks cohesive regional alliances, this report emphasizes how the challenges faced across countries are often common and interconnected, and, importantly, that climate action requires coordination on multiple fronts. Simultaneously, it illustrates the differences across countries, places, and people that require targeted strategies and interventions. This report demonstrates how shocks and stressors re intensifying and how investments in adaptation could bring significant benefits in the form of avoided losses, accelerated economic potential, and amplified social and economic spillovers. Given the region’s high emission and energy intensity and the limitations of its current fossil fuel-based development model, the report articulates a path to greener and more resilient growth, a path that is more consistent with the aspiration of accession to the EU. The report finds that the net zero transition can be undertaken without compromising the economic potential of the Western Balkans and that it could lead to higher growth than under the Reference Scenario (RS) with appropriate structural reforms.
Users also downloaded
Showing related downloaded files
Publication State of Social Protection Report 2025(Washington, DC: World Bank, 2025-04-07)Social protection goes well beyond cash transfers; it includes policies and programs that bridge skill, financial, and information gaps, aiding people in securing better jobs. The three pillars of social protection—social assistance, social insurance, and labor market programs—support households and workers in handling crises, escaping poverty, facing transitions, and seizing employment opportunities. But despite a substantial expansion over the past decade, 2 billion people remain uncovered or inadequately covered across low- and middle-income countries. Drawing from administrative and household survey data from the World Bank’s Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE), the "State of Social Protection Report 2025: The 2-Billion-Person Challenge" documents advances and challenges to strengthening social protection and labor systems across low- and middle-income countries, analyzing the evolution of expenditure, coverage, and adequacy of support. This report details four policy action areas governments can embrace to maximize the benefits of adequate social protection for all: extending social protection to those in need; strengthening the adequacy of social protection support; building shock-proof social protection systems; and optimizing social protection financing. The report discusses how the path of reforms will depend on country context, capacity, and fiscal space. The rising frequency of shocks and crises calls for major investments in the adaptability and preparedness of social protection and labor systems. Amid a world in transition, social protection is more important and necessary than ever.Publication Cities’ Partnership Initiative(Washington, DC: World Bank, 2025-04-24)Sustainable urban development is one of the key areas of development policy in Poland, which is in line with global trends. Sustainable urban development requires an integrated approach that takes into account the complexity and dynamics of phenomena and processes taking place in the urban environment. Meeting the challenges of urban development requires, on the one hand, a steady increase in the capacity of cities to plan and implement development projects, and on the other hand, a favorable regulatory and financial framework and support instruments that are an adequate response to the needs of urban centers. The Cities’ Partnership Initiative (CPI) is a flagship project of the Ministry of Development Funds and Regional Policy of Poland (MDFRP) aimed at supporting sustainable urban development. This final report is the third product of the Reimbursable Advisory Service Agreement on Sustainable Urban Development - Cities’ Partnership Initiative concluded between the MDFRP and the World Bank on January 28, 2022. The report summarizes the project work, including the results of the work of 30 CPI-participating cities, and presents conclusions and recommendations on the three thematic networks and the CPI formula itself.Publication Commodity Markets Outlook, April 2025(Washington, DC: World Bank, 2025-04-29)Commodity prices are set to fall sharply this year, by about 12 percent overall, as weakening global economic growth weighs on demand. In 2026, commodity prices are projected to reach a six-year low. Oil prices are expected to exert substantial downward pressure on the aggregate commodity index in 2025, as a marked slowdown in global oil consumption coincides with expanding supply. The anticipated commodity price softening is broad-based, however, with more than half of the commodities in the forecast set to decrease this year, many by more than 10 percent. The latest shocks to hit commodity markets extend a so far tumultuous decade, marked by the highest level of commodity price volatility in at least half a century. Between 2020 and 2024, commodity price swings were frequent and sharp, with knock-on consequences for economic activity and inflation. In the next two years, commodity prices are expected to put downward pressure on global inflation. Risks to the commodity price projections are tilted to the downside. A sharper-than-expected slowdown in global growth—driven by worsening trade relations or a prolonged tightening of financial conditions—could further depress commodity demand, especially for industrial products. In addition, if OPEC+ fully unwinds its voluntary supply cuts, oil production will far exceed projected consumption. There are also important upside risks to commodity prices—for instance, if geopolitical tensions worsen, threatening oil and gas supplies, or if extreme weather events lead to agricultural and energy price spikes.Publication Air Quality Management in Central Asia(Washington, DC: World Bank, 2025-05-02)This report aims to enhance the understanding of the priorities, needs, and solutions for improving air quality (AQ) in Central Asia (CA) through local action and regional collaboration. It focuses on key components of holistic air quality management (AQM): evidence-based analytics to identify the main sources of air pollution in CA, application of modern tools to assess the impact of cost-effective measures to improve AQ, assessment of the institutional and governance setup for AQM in CA with recommendations to strengthen it, and approaches to financing AQ improvement. Given the lack of comprehensive systematic and validated emission inventories of all PM2.5 precursor emissions, the technical assessment employs the regional emission inventory of the Greenhouse Gas - Air Pollution Interactions and Synergies (GAINS) model. Input data were updated for this study based on recent energy statistics and relevant national surveys. This report addresses emissions and the regional transboundary flows of pollution between Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan. Subsequently, the resulting PM2.5 concentrations in ambient air throughout CA were computed with the atmospheric chemistry and transport calculations of the GAINS model. Employing the source apportionment results of the GAINS model, the analysis then examines the contributions to PM2.5 population exposure. The report also presents source apportionment analyses for important air pollution hot spots in CA: Dushanbe (Tajikistan), Bishkek (the Kyrgyz Republic), Tashkent (Uzbekistan), Samarkand (Uzbekistan), Astana, and Almaty (Kazakhstan).Publication Enhancing Bahia’s Agriculture Support(Washington, DC: World Bank, 2025-04-14)Efforts to conduct comprehensive assessments of agricultural policies globally involve various methodologies and contributions from international bodies such as the Food and Agriculture Organization of the United Nations (FAO), the World Trade Organization (WTO), the International Food and Policy Research Institute (IFPRI), and the Organization for Economic Cooperation and Development (OECD). The OECD methodology, in particular, estimates the value of monetary transfers made by taxpayers and consumers to agricultural producers. One objective of this analysis is to quantify the impact of the agricultural policies of the state government of Bahia on producers, consumers, and the sector as a whole, based on the transfers these policies generate. Consequently, the results reflect only the transfers derived from the implementation of Bahia's agricultural policies, excluding national policies, although both could be complementary and measure their total impact on the income of the state's producers. The analysis estimates the amount and significance of these transfers within the producer’s gross income, facilitating comparisons over time and with other economies.