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Economic growth in the Western Balkans is expected to accelerate in 2026 and strengthen further in 2027, supported by consumption and investment. The regional economy has shown resilience to shocks and continues to converge with the European Union. Growth is projected to reach 3.1% in 2026, up from 2.6% in 2025, and to rise to 3.4% in 2027 and 2028.
The spotlight of this edition focuses on trade-related regulation. Successive rounds of tariff liberalization have made the region highly integrated into global trade, with trade in goods and services reaching 107% of regional GDP in 2025, above the EU average of 90%. However, behind-the-border costs continue to hold firms back. Average tariffs on goods are about 6%, but non-tariff measures add an estimated tariff-equivalent cost of 10%, and up to 20-30% in some sectors. Restrictions on commercial presence add an estimated 17%, and those on cross-border services add an estimated 29%.
These costs make it harder for firms to sustain export relationships. Only around one third of new export relationships survive their first year, and just 1% to 4% reach year five. This matters for jobs, as trading firms employ the vast majority of workers in the region and generally pay better than non-trading-oriented firms. Removing half of the remaining barriers could raise GDP by up to 12.5% over the medium term and create thousands of jobs.
The path forward is better, not simply less, regulation: streamlining and digitizing procedures, using risk-based inspections, recognizing aligned standards and qualifications, and preserving safeguards that serve legitimate public objectives.
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