Percorso:ANSA > Nuova Europa > Analysis > WEF, WIIW 'mapping' Western Balkans economy and integration

WEF, WIIW 'mapping' Western Balkans economy and integration

Combined GDP of the region just slightly higher than Slovakia

02 February, 19:18
(by Stefano Giantin) (ANSA) - BELGRADE - Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, countries with a "significant" economic and political "potential", will one day join the EU, but "many challenges remain, including inadequate infrastructure and declining populations," a new World Economic Forum briefing said.

The Strategic Intelligence Briefing, available online, 'maps' the current situation in the Western Balkans in relation to institutions, economy, demographics, infrastructure, security.

It is based on the opinions and views of experts from the World Economic Forum's Expert Network and was curated by the Vienna Institute for International Economic Studies (wiiw).

The six countries had a combined nominal GDP of about 95 billion euro in 2018, "slightly larger than Slovakia's economy and a bit smaller than that of Ukraine," the report said. "The region's economies are becoming more open, but need to attract a better quality of foreign investment," the WEF briefing underlined. Moreover, all Western Balkan countries "suffer from chronic trade deficits, as a result of limited production capacity, a lack of competitiveness, and an outsized need for remittances to finance imports," and they struggle to attract investment "into higher value-added sectors, and are hindered by weak governance and infrastructure." Infrastructure is a particular strong challenge in the region, where "long-standing deficiencies have been compounded by the wars of the 1990s, "limited funding options" but also by "delays in European Union accession." Whereas "some European countries receive as much as 5% of their gross national income in transfers from the EU budget every year, which pays for the majority of public infrastructure investment," the Balkans generally have to find resources for infrastructures themselves, often recurring to foreign credits and investments from Russia or China. Another serious issue in the region is related to demographics, with majority of states in the Balkans that "will continue to experience a significant population decline for decades," due to natural decline and heavy emigration. "While joblessness has recently trended downwards, it remains substantially higher than in most of EU member states" and the "sizeable wage differential and access to jobs in places like Germany, this will continue to encourage outward migration," the briefing reads. Outward migration has also positive effects, such as the inflow of remittances, but on long rung "it will likely create serious economic and social challenges that can only be offset by immigration, higher fertility rates, and automation." Although "corruption and state capture remain key challenges", all six Western Balkan countries "have a clear European Union accession perspective." However that "enlargement fatigue will prevent Western Balkan countries from joining anytime soon." This could provoke a lost in "faith in the EU accession process," with serious consequences. "Countries that have achieved substantial reforms, particularly North Macedonia, could backslide as the influence of players like China grows.

More broadly, fading hopes of EU accession would negatively impact economic development - further hindering convergence with the rest of Europe." (ANSA).

© Copyright ANSA - All rights reserved