Greece’s recent exit from its economic adjustment programme last week has generated some long overdue welcome headlines for the country. But how can the country generate sustainable growth in the coming years? And what would a lasting Greek recovery mean for its neighbours throughout the Balkan region?
One way to promote growth in Greece is to foster trade and investment linkages and develop interconnections with neighbouring countries, a fact recognised by the Greek government in their recently published growth strategy. Greece is well placed to play a leading role. It occupies a strategic location near the crossroads of Europe, Asia and Africa. It also shares a land border with Albania, FYR Macedonia, Bulgaria and Turkey and is widely regarded as a gateway to Europe from countries further east and south. For example, it has in recent years attracted significant investment from China as part of that country’s “Belt and Road initiative”.
By developing these links, Greece would be promoting integration with a region of high potential and strong economic performance in recent years. Bulgaria, for example, has had robust growth in recent years, including by 3.6 per cent in 2017. Further north, the Romanian economy was one of the fastest growing in the EU last year, with GDP growth reaching 6.9 per cent. And Albania has also been performing well, with growth nearly touching 4 per cent in 2017. With the Greek economy now growing too, albeit more slowly than most of its neighbours, the time is ripe to step up the level of cross-border trade and investment.
How can these links be enhanced? One way is through improved infrastructure. Encouragingly, the Greek government, along with its partners in neighbouring countries, is committed to furthering a number of cross-border road and railway projects in the coming years. These include the development of corridor X (road and rail) from Thessaloniki through Skopje, Belgrade, Zagreb and Budapest, the Pan-European corridor IX from Alexandroupolis through Bulgaria, Romania, Ukraine, the Black Sea and Russia, and the Adriatic-Ionian corridor through the Western Balkans to the port of Bar in Montenegro. Several important regional energy projects are also under way or being considered, including the Trans Adriatic Pipeline, the gas interconnector pipeline between Greece and Bulgaria, and a planned LNG floating terminal in Alexandroupolis. These energy projects are not only important for the countries themselves but also for the wider central and south-eastern European region in terms of diversifying energy sources and routes.
Alongside these infrastructure improvements, the Greek government’s commitment to reducing trade delays is also important. Currently the time and cost to export from Greece in terms of border compliance are approximately double the level in OECD high-income countries, according to the World Bank’s Doing Business 2018 report. For their part, countries in the Western Balkans have made major progress over the years in reducing trade barriers, within the context both of their regional free trade agreement and of their aspirations for eventual EU membership. Further advances in this area would be beneficial for all sides.
At the EBRD we welcome very much these efforts to promote cross-border linkages. We have lengthy experience as an investor throughout the Balkan region, and considerable expertise in designing major infrastructure and energy sector projects, making us a partner for projects and policy guidance towards the creation of a unified economic space throughout south-eastern Europe.