WB: South East Europe climbs slowly out of recession

South East Europe’s (SEE6 – Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia) economy began recovering from the 2012 recession, growing by 2.2 percent on average in 2013, according to the World Bank’s latest South East Europe Regular Economic Report. Looking ahead, the report says the region is projected to grow at 1.9 percent in 2014 and 2.6 percent in 2015 thanks to growing external demand, but significant risks cloud the outlook, including the expected impact of recent flooding in the region.
The floods will undoubtedly have a negative impact on growth in 2014, though it is too early to measure the full impact. “In 2013, SEE began recovering from recession,” said Ellen Goldstein, World Bank Country Director for SEE. “Economic growth was possible thanks to the increased demand for regional exports from high-income countries, particularly those in the EU. The devastating floods in mid-May are a humanitarian disaster for several countries of SEE, and will impact economic recovery for the next few years in ways that have yet to be fully assessed.”
The report says that challenges remain and need action in the financial and fiscal sectors. Taming the high and still rising non-performing loans; resuming credit growth to viable corporate borrowers; pursuing decisive consolidation efforts to restore fiscal balance; and reducing public debt would help stimulate economic activity. To sustain growth in the region, the countries need to further strengthen their domestic macroeconomic fundamentals and policies that boost productivity and resilience to external turmoil.

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