Growth in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Macedonia, and Serbia – the six countries of the Western Balkans – is expected to return in 2021, in the wake of the region’s worst economic downturn on record during 2020. Following the economic devastation brought on by the COVID-19 pandemic that resulted in an estimated contraction of growth in the region of 3.4 percent last year, the Western Balkans region is expected to grow by 4.4 percent in 2021. Going forward, growth is expected to moderate to 3.7 in 2022 and 2023, with lingering damage from the pandemic continuing to depress investments and employment in the region, the World Bank’s latest report said.

We are certainly seeing some positive trends around the region, boosted by swift action taken by many countries to contain the worst impacts of the pandemic, but the health and economic devastation of the pandemic will continue to have an impact, said Linda Van Gelder, World Bank’s Regional Director for Western Balkans.

The introduction of vaccines, coupled with improvements in confidence, consumption, and trade, will also help keep this momentum going, but countries must remain vigilant in their efforts to introduce and reinforce policies that can lead to growth, protect health outcomes, and boost human capital, she added.

The pandemic halted a decade of progress in boosting incomes and reducing poverty in the countries of the region and labor markets in the Western Balkans have recovered just half of their pandemic losses – leaving large numbers of people unemployed and forcing many others to drop out of the labor market all together. Although the unemployment rate declined – from 13.5 percent in 2019 to 12.6 percent in 2020 – this was primarily the result of people leaving the job market, with overall job losses around the Western Balkans reaching nearly 70,000 by the end of 2020. Furthermore, these losses disproportionately impacted the more vulnerable populations in the region, including, women and youth – with the youth unemployment rate rising to 33.6 percent in 2020, disrupting a five-year trend of decline.

Policy efforts in the region need to stay tightly focused on fighting the pandemic, limiting social damage, and nurturing recovery. Macedonia should ensure that their health care system is adequately resourced for vaccine purchase and distribution, testing, therapies, personal protective equipment, and upgrading and maintaining health care facilities. The World Bank is providing support in this area, said Massimiliano Paolucci, Director of the World Bank Office in Macedonia.

However, as they continue to protect lives and sources of livelihoods, authorities need to start focusing on the long term.

Due to the historically highest level of public debt, restoring fiscal sustainability has a high priority as soon as the recovery begins to yield results.  Investments in education, digitalization and other infrastructure projects, as well as green initiatives should all be prioritized since they can boost productivity and accelerate growth and the necessary transition to lower carbon dependence as countries emerge from the pandemic, said Paolucci.