Publication: Western Balkans Regular Economic Report No. 15, Spring 2019: Reform Momentum Needed
Loading...
Date
2019-04
ISSN
Published
2019-04
Author(s)
Editor(s)
Abstract
The Western Balkans economies are projected to continue to expand in 2019–20, but this stable outlook is vulnerable to risks. In 2018 economic growth in the Western Balkans reached 3.8 percent, supported by increased public spending, and in Albania and North Macedonia also by a rise in net exports. Growth is projected to average 3.7 percent for 2019–20, faster than the EU and similar to the average for Central and Eastern Europe (CEE). Growth will differ by country, accelerating in Bosnia and Herzegovina, Kosovo, and North Macedonia while decelerating in Albania, Montenegro, and Serbia. Factors common to all countries are the recent fiscal stimuli and favorable external conditions that pushed growth in 2018, beyond its potential in some of them. The waning effects of these factors challenges the medium-term growth outlook in the region. Moreover, there is growing public discontent in several countries which could lead to higher political uncertainty and a slower pace of structural reforms. In North Macedonia, by contrast, the resolution in early 2019 of the decades-long dispute with Greece over the country’s name is an opportunity to advance reforms, accelerate EU accession, and become more integrated in global markets. Western Balkan countries are also confronted with growing external risks from slower-than projected growth in the EU, geopolitical and trade disputes, and a possible tightening of financing conditions in international capital markets. Against this backdrop, there is anopportunity to advance reforms to mitigate risks and the demands for greater economic opportunities. This report features a special focus section on human capital development. The region has achieved notable progress in expanding access to basic education and health and setting up social protection systems to protect the vulnerable. This Focus Section explores how Western Balkan societies can be better prepared to take advantage of the opportunities offered by rapid technological changes, mitigate risks, and create dynamic growing economies where young people can thrive and realize their aspirations. Unaddressed, the region’s human capital challenges will severely limit the region’s prospects for growth and poverty reduction. For instance, too little investment in early childhood development translates into poor performance in primary and secondaryeducation in some countries. In school, students in some countries do not acquire the skills they need to function effectively as labor markets become ever more competitive. Poor quality technical and university education makes the transition from school to work difficult; many graduates who suffer years of unemployment cannot build work experience. Social assistance programs also do not give vulnerable households the support they need to prepare them for the labor market. Inefficient health systems are unable to address the rise of noncommunicable diseases, and individual out-of-pocket spending on health is high. In general, countries in the region must act boldly to build human capital.
Link to Data Set
Citation
“World Bank Group. 2019. Western Balkans Regular Economic Report No. 15, Spring 2019: Reform Momentum Needed. © World Bank. http://hdl.handle.net/10986/31506 License: CC BY 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. 13, Spring 2018(World Bank, Washington, DC, 2018-04-10)GDP growth in the Western Balkans slowed from 3.1 percent in 2016 to an estimated 2.4 percent in 2017. Regional growth in 2017 is less optimistic than the 2.6 percent expected when the Fall issue of this report was published. It slowed in Serbia due to a harsh winter and stalled in FYR Macedonia, where the political crisis deterred both public and private investment. Bosnia and Herzegovina (BiH) grew at a rate like the last two years. The dynamism of the smaller economies of Albania, Kosovo, and Montenegro drove regional growth in 2017, with support from higher growth in trading partners, a pickup in commodity prices, and the execution of large investment projects. Bold structural reforms are necessary if the region is to grow sustainably over the medium term. Regional GDP growth is projected to rise from 2.4 percent in 2017 to 3.2 percent in 2018 and 3.5 percent in 2019. Countries are expected to grow faster, pushed up by projected stronger growth in Europe, except for Albania, where moderation is expected as large investment projects are completed, and Montenegro, which is expected to undergo a much-needed fiscal consolidation. Among risks to the outlook are trade protectionism, normalization of interest rates globally, and low potential growth and uncertainty about domestic policy or policy reversals. These risks can be mitigated by rationalizing spending to build fiscal space for growth-enhancing reforms, and by a more strategic approach to boost competitiveness. Policies to lift physical and human capital, expand labor force participation, and improve market institutions should help raise growth potential and reduce inequality.Publication Western Balkans Regular Economic Report, No. 16, Fall 2019(World Bank, Washington, DC, 2019-10-01)Improving the efficiency and equity of public spending and strengthening revenue mobilization remains a priority in all Western Balkan countries. Public sector wage bills and pensions constitute the largest share of public spending in the region. Tighter controls on wage bills, reducing tax expenditures, and better targeting of social benefits would open space for more public investment, improve equity, and enable the build-up of fiscal buffers to mitigate rising risks. As outlined in this report, fiscal rules can help anchor spending and fiscal sustainability. However, their credibility in the region needs to be restored after they have been repeatedly breached in some countries. Fiscal management reforms are needed as a part of broader structural reforms that help increase the region's export competitiveness. This includes strengthening state institutions that protect the rule of law and private sector competition to unleash productivity growth and innovation by enabling a level playing field between firms. Together, these reforms would help unlock stronger, more equitable, and more sustainable growth, ensuring faster convergence with EU income levels. A strong commitment to sound macro-fiscal policy and structural reforms was always important—rising uncertainties have made it an imperative.Publication EU11 Regular Economic Report, Issue #27, June 2013(Washington, DC, 2013-06)This economic report covers economic developments, prospects, and policies in 11 European Union (EU) countries. Throughout the report this group of eleven countries is referred to as EU11.The economic recovery of the EU11 countries was put on hold in 2012 as the external environment weakened and domestic demand subsided. All EU11 countries, with the exception of Latvia, grew slower than in 2011. The overall Gross domestic product (GDP) growth of 0.8 percent in 2012 was just a quarter of the pace recorded the year before. Domestic demand, in particular investment, abated, leaving net exports as the sole driver of growth. In addition, the number of EU11 countries in recession doubled to four, after the Czech Republic and Hungary joined Slovenia and Croatia. Overall, this empirical result confirms that, in qualitative terms, the analyzed firm characteristics affect job creation both during recessions and economic recoveries. They indicate that the more productive firms tend to be less vulnerable to economic downturns. Accordingly, any type of activities that increase productivity can be expected to reduce the overall exposure of the EU11 economies to recessions and, therefore, should allow firms to compete more successfully with international competitors.Publication Western Balkans Regular Economic Report, No. 19, Spring 2021(World Bank, Washington, DC, 2021-04-27)In 2020 COVID-19 (coronavirus) plunged the Western Balkan countries, like the rest of the world, into deep recession. Economic activity contracted by an estimated 3.4 percent - the worst downturn on record. The primary causes were the drop in both domestic and foreign demand and disruptions in supply chains, especially early in the year when activity in a number of sectors simply shut down. Countries like Montenegro that have a services or tourism-oriented economy, and those where more stringent containment measures and lockdowns were imposed fared the worst. The economy began to reactivate in Q3 2020, supported by a partial easing of stringent lockdowns and the revival of global demand as vaccine development advanced. However, in late 2020 restrictions were renewed in response to a resurgence of infections across most of the region; they have kept the recovery subdued. The crisis has led to significant job losses and interruptions in welfare improvements, but the labor market is rebounding from the troughs of the recession. As noted in the Fall 2020 Regular Economic Report (RER), the pandemic halted a decade of progress in boosting incomes and reducing poverty: Since its start 139,000 jobs have been lost and between 165,000 and 336,000 people in theregion were pushed into poverty. However, job support schemes and other government measures limited the labor market fallout and helped to prevent steeper spikes in poverty. By yearend, the labor market had recovered half its pandemic losses, but large numbers of people are still unemployed, and many dropped out of the labor force discouraged by the poor economic prospects. Moreover, workers with less education, women, youth, those in contact-intensive sectors, and those informally employed have suffered disproportionate livelihood and income losses.Publication South East Europe Regular Economic Report, No. 3(World Bank, Washington, DC, 2012-12)After two years of fragile recovery from the global recession, as a group the six South East European countries (SEE6) Albania, Bosnia and Herzegovina (BIH), Kosovo, FYR Macedonia, Montenegro, and Serbia are experiencing a double-dip recession in 2012. Deteriorating external conditions, the impact of the severe winter on economic activity, and a continuing rise in unemployment early in the year took a toll on consumption, investments, and exports. In this fragile environment, Serbia, Albania, and Montenegro in particular will need to persevere in reducing fiscal deficits and bringing down debt, even as they must continue to improve the investment climate and reform labor markets and the public sector. In all SEE6 countries, public sector arrears pose special challenges to fiscal management and the private sector, and there are unfinished, structural reforms agendas. After two years of deep crisis, a sluggish recovery, rising unemployment and poverty, and a continuing recession even with the best efforts on fiscal consolidation and structural reforms, which must continue there is a danger that SEE6 countries are caught in a vicious circle that reinforces the cycle of long-term austerity, low if not negative growth, high debt, and even higher risks of social upheaval. To prevent this outcome, this report argues, SEE6 governments need to redouble their efforts to accelerate fiscal and structural reforms. These countries have largely exhausted their fiscal space and reduced public investment (except Kosovo, an outlier) to a fraction of what is needed to maintain public capital stock in critical infrastructure. Private investment is suppressed by the lack of productive, complementary public investments, slow credit recovery, and depressed domestic demand. External demand is minimal, and exports are not only too few, they are prevented from becoming an immediate, new engine of growth by infrastructure, finance, and other deficiencies. If such accelerated reforms materialize, external support well-coordinated and targeting the region as a whole, not just individual countries from the European Union (EU) and global international financial institutions (IFIs) could help ease the transition to a more sustained growth in medium term. In November 2012, the European Investment Bank, the European Bank for Reconstruction and Development, and the World Bank announced 30 billion in financing for Central and South East European countries over the next two years. In SEE6 countries, this timely initiative would likely be delivered via the Western Balkans Investment Framework (WBIF) and other IFI resources. Investment Promotion Agency (IPA) resources will also be important, especially in supporting institutional reform and rural development. By focusing on major infrastructure of regional significance (rail, highways, energy, and gas) and on jobs and small and medium enterprises, the efficiency of investments, growth, and employment could be substantially heightened. However, additional financing for growth and jobs could prove effective only if accompanied by intensified fiscal and structural reforms, especially in the areas of investment climate, labor markets, and governance.
Users also downloaded
Showing related downloaded files
Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.Publication Improving the Performance of Higher Education in Vietnam(World Bank, Washington, DC, 2020-04-28)The progress of East Asian economies in recent years illustrates a strong symbiotic relationship among higher education, innovation, and growth through the production of research and skills. In the case of Vietnam, higher education has a significant positive effect on household poverty and long-term earnings at the individual level, where annualized private returns to higher education are above fifteen percent, one of the highest levels in the world. As Vietnam aspires to become an upper middle-income country by 2035, its productivity needs to increase continuously, which requires greater production and effective use of highskilled manpower and science, technology and innovation (STI). There is a disconnect between Vietnam’s remarkable achievement on equitable economic growth and human development, on the one hand, and the performance of the higher education system, on the other hand. Vietnam has experimented with a number of higher education reforms in the last two decades, with some success in expanding access but missing opportunities in achieving good results on quality and relevance, and in furthering equity. The main objective of this Bank’s report is to provide a diagnosis of the current performance of the Vietnamese universities and propose a range of options for transforming and developing the higher education system.Publication World Development Report 2011(World Bank, 2011)The 2011 World development report looks across disciplines and experiences drawn from around the world to offer some ideas and practical recommendations on how to move beyond conflict and fragility and secure development. The key messages are important for all countries-low, middle, and high income-as well as for regional and global institutions: first, institutional legitimacy is the key to stability. When state institutions do not adequately protect citizens, guard against corruption, or provide access to justice; when markets do not provide job opportunities; or when communities have lost social cohesion-the likelihood of violent conflict increases. Second, investing in citizen security, justice, and jobs is essential to reducing violence. But there are major structural gaps in our collective capabilities to support these areas. Third, confronting this challenge effectively means that institutions need to change. International agencies and partners from other countries must adapt procedures so they can respond with agility and speed, a longer-term perspective, and greater staying power. Fourth, need to adopt a layered approach. Some problems can be addressed at the country level, but others need to be addressed at a regional level, such as developing markets that integrate insecure areas and pooling resources for building capacity Fifth, in adopting these approaches, need to be aware that the global landscape is changing. Regional institutions and middle income countries are playing a larger role. This means should pay more attention to south-south and south-north exchanges, and to the recent transition experiences of middle income countries.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Remarks to the Annual Meetings 2020 Development Committee(World Bank, Washington, DC, 2020-10-16)David Malpass, President of the World Bank Group, announced that the Board approved a fast track approach to emergency health support programs that now covers 111 countries. Most projects are well advanced, with average disbursement upward of 40 percent. The goal is to take broad, fast action early. The operational framework presented back in June has positioned the Bank to help countries address immediate health threats and social and economic impacts and maintain our focus on long-term development. The Bank is making good progress toward the 15-month target of 160 billion dollars in surge financing. Much of it is for the poorest countries and will take the form of grants or low-rate, long-maturity loans. IFC, through the Global Health Platform, will be providing financing to vaccine manufacturers to foster expanded production of COVID-19 vaccines in both part 1 and 2 countries, providing production is reserved for emerging markets. The Development Committee holds a unique place in the international architecture. It is the only global forum in which the Governments of developed countries and the Governments of developing countries, creditor countries and borrower countries, come together to discuss development and the ‘net transfer of resources to developing countries.’ The current International Financial Architecture system is skewed in favor of the rich and creditor countries. It is important that all voices are heard, so Malpass urged the Ministers of developing countries to use their voice and speak their minds today. Malpass urged consideration of how we can build a new approach to debt restructuring that allows for a fair relationship and balance between creditors and debtors. This will be critical in restoring growth in developing countries; and helping reverse the inequality.