SARAJEVO, September 27 – Growth is projected to continue in 2016 in Bosnia and Herzegovina, leading the way for increased employment and poverty reduction, according to the latest Southeast Europe Regular Economic Report (SEERER). Growth is projected at 2.8 percent in 2016, down slightly from 3.0 percent in 2015, and is forecast to reach 3.7 percent by 2018, if structural reforms remain on track. Economic growth at the regional level is expected to reach 2.7 percent in 2016, up from 2.2 percent in 2015. An acceleration of growth is also expected to continue through 2017 and 2018.
This accelerating growth is helping improve employment in Bosnia and Herzegovina and is driving down poverty in the region, notes the report. Unemployment declined by 2.3 percentage points in Bosnia and Herzegovina but still hovers around 25 percent.
“Underpinning the acceleration in growth was Serbia, the region’s largest economy,” says Barbara Cunha, World Bank’s Senior Economist and lead author of the report. “Serbia moved from 0.7 percent growth last year in the aftermath of the 2014 floods to an expected 2.5 percent this year.”
2015 |
2016f |
2017f |
2018f |
|
Real GDP growth (percent) |
||||
Albania |
2.8 |
3.2 |
3.5 |
3.5 |
Bosnia and Herzegovina |
3.0 |
2.8 |
3.2 |
3.7 |
Kosovo |
3.9 |
3.6 |
3.9 |
3.7 |
Macedonia, FYR |
3.7 |
2.0 |
3.3 |
3.7 |
Montenegro |
3.2 |
3.2 |
3.6 |
3.0 |
Serbia |
0.7 |
2.5 |
2.8 |
3.5 |
SEE6 |
2.2 |
2.7 |
3.2 |
3.6 |
Other economies in the region are expected to maintain growth of between 2.8 and 3.6 percent in 2016, with the exception of a slowdown in FYR Macedonia. In many countries, growth is translating into jobs. Employment rose by 4.7 percent in Serbia and 6.7 percent in Albania in the first half of 2016.
“Stronger growth is starting to have a positive impact on poverty and unemployment in the region,” notes Ellen Goldstein, World Bank Regional Director for Southeast Europe. “While the unemployment rate remains high, at around 25 percent on average, rates declined in five of the six countries of Southeast Europe this year.”
Global economic circumstances do not favor expansion, but for small economies like those in Southeast Europe, internal reforms can stimulate stronger outward-oriented growth even in a global slowdown.
“Countries with strong reform programs have seen a rise in investment which became a solid driver of growth in the first half of 2016,” says Katia Vostroknutova, World Bank’s Lead Economist and one of the authors of the report. “Private investment contributed strongly to growth in Serbia and Albania, and fiscal deficits and public debt declined in response to reforms in these countries.”
The average fiscal deficit in the region declined from 3.6 percent in 2015 to 3.3 percent in 2016. This average masks considerable variation among countries, with public debt rising in those countries where fiscal accounts have been overstretched by lax public spending.
The report concludes that the region has continued growing in the face of a difficult European and global environment. To sustain growth, further reforms are advised to maintain macroeconomic stability, stimulate private sector activity, enhance the effectiveness of the public sector, and build resilience to external shocks.
