Modest recovery for South Eastern Europe

By Axel  Reiserer

Growth in South Eastern Europe (SEE) will continue recovering from the very low levels recorded in 2012 (0.2 per cent on average) but will remain modest, the EBRD says in its latest Regional Economic Prospects report, published today. Growth in all countries is expected to be positive, reaching on average 1.6 per cent this year and 2.2 per cent next year. SEE is benefitting from the positive signs in the eurozone.

Economic activity in Albania has been weakening through 2012 and the first months of 2013. Fiscal challenges are severe, with public debt above 60 per cent of GDP, and financial sector vulnerabilities are evident with NPLs of around 25 per cent of total loans. After 1.2 per cent growth this year, the EBRD expects a slight increase to 2.0 per cent next year.

Bosnia and Herzegovina’s economy remains stable but growth so far in 2013 is only minimal at best after the recession in 2012. The complex political structure and weak business environment continue to hold back growth prospects. The EBRD forecasts 0.1 per cent growth this year and 1.8 per cent in 2014.

In Bulgaria the economy showed little signs of a sustained recovery in 2013. Weak internal demand means that growth in 2013 is likely to be slightly lower than the 0.8 per cent growth recorded in 2012. For 2014 a slight improvement to 2.0 per cent growth is expected.

The economy in FYR Macedonia has shown some signs of recovery in the first half of 2013. Output grew by 2.9 per cent year-on-year in the first quarter and 3.9 per cent year-on-year in the second quarter. The country continues to make strong efforts to improve the business environment and attract FDI.

Economic growth in Kosovo in 2012 was the highest in the region at 2.5 per cent, although from the lowest base in the region. Growth in 2013 is likely to be similar to last year and rise to 3.5 per cent in 2014.

In Montenegro economic activity picked up in the first half of this year. However, the current account deficit remains the highest in the region. Credit to the economy continues to contract and NPLs are high at close to one in five loans.

Romania’s GDP rose by 1.3 per cent year-on-year in the second quarter. Although inflation fell and the fiscal performance improved, growth prospects continue to be strongly dependent on the eurozone.

Serbia’s economy saw an export-led rise of GDP by 2.7 per cent year-on-year in the first quarter which slowed to 0.2 per cent in the second quarter. Severe fiscal problems and a high number of non-performing loans are severely affecting the economy.

Read the full Regional Economic Prospects - November 2013 (892KB - PDF)

Download growth in real GDP data (5KB - CSV)