PRISTINA, April 6, 2017 – Economic growth in Kosovo remained above that of neighboring countries and contributed to considerable job creation in 2016, according to the latest Western Balkans Regular Economic Report (WBRER) of the World Bank, launched today in Skopje. Productivity and competiveness gains are essential to make growth more sustainable and address the still high level of unemployment, particularly among youth.
The Western Balkans as a region grew faster in 2016 than a year earlier, according to the report. Compared to 2015 the strengthening of growth in Serbia and Albania compensated for weaker expansion in Montenegro and FYR Macedonia, the slight slowdown in growth in Kosovo, and steady growth in Bosnia and Herzegovina.
Continuing economic growth created more jobs in the region, and all countries in the region, including Kosovo, and with the exception of Montenegro, reduced unemployment. By September 2016, job growth was highest in Albania and Serbia, translating into an 8.5 and 7.2 percent increase over 2016, respectively.
Table 1.1. A Positive Growth Outlook
"The recovery of growth in the Western Balkans accelerated in 2016, with encouraging declines in unemployment and poverty" said Ellen Goldstein, World Bank Director for the Western Balkans. "Growth and employment increased especially in countries that have made significant progress in cutting fiscal deficits, tackling the legacy of a large and ineffective state and improving the environment for domestic and foreign investments".
Despite this progress, the labor market remains challenging in the Western Balkans, with the unemployment rate hovering around 22 percent in 2016.
“The economic growth outlook of Kosovo remains positive. However despite welcome evidence of job creation in 2016, Kosovo needs to make economic growth much more reliant on higher productivity at home and greater competitiveness abroad, in order to tackle historically high levels of unemployment, especially among youth and women”, says Marco Mantovanelli, World Bank Manager for Kosovo.
The report notes that despite a gradual recovery in EU demand for Western Balkan exports, low commodity prices reduced export earnings in Kosovo but also in Albania and Montenegro, and major infrastructure investments continue to require large capital-goods imports, leading to widening Trade and Current Account Deficits in the region.
According to the report, sustaining growth in the Western Balkans and tackling the ongoing challenges of unemployment will require countries to stay the course of reform. In particular, further fiscal consolidation and structural reforms are necessary for all six countries to improve the efficiency of their public sectors and enhance the competitiveness of their economies in order to promote private sector development.