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The Balkans: Problems and Prospects Vladimir Gligorov Sarajevo, 24-25 February

This article explores the challenges and possibilities for economic growth in the Balkans region. Topics discussed include external imbalances, weak tradeable sector, and low domestic savings. The importance of regional and EU integration is emphasized, along with the need for structural reforms and changes in economic policies to address these issues.

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The Balkans: Problems and Prospects Vladimir Gligorov Sarajevo, 24-25 February

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  1. The Balkans: Problems and ProspectsVladimir GligorovSarajevo, 24-25 February

  2. Contents Growth and external imbalances Effects of crisis Growth prospects Regional and EU integration

  3. GDP per capita, 2008EUR at PPPs Source: wiiw Annual Database incorporating national statistics.

  4. Real GDP growth in CEE and SEE, 2000 = 100 Note: * PCC-4:AL,BA,ME,RS. **CC-2: HR, MK. Source: wiiw Annual Database incorporating national statistics.

  5. FDI stock, per capita, in NMS and SEEC, 2000-2008, EUR Source: wiiw Annual Database incorporating national statistics.

  6. Industrial production, 2008 Note: Until 1998 data refer to Serbia and Montenegro. Source: wiiw Annual Database incorporating national statistics.

  7. Exports of goods and services (BOP)in % of GDP Source: wiiw Annual Database incorporating national statistics.

  8. Unemployment rates, 2007-2009in %, annual average, LFS Source: wiiw Database.

  9. The main problem Weak tradeable sector External imbalances Low domestic savings

  10. GDP growth rates, 2005-2010year-on-year, growth in % Source: wiiw Annual Database incorporating national statistics.

  11. Industrial production growth, 2005-2010year-on-year, growth in % Source: wiiw Annual Database incorporating national statistics.

  12. 2007 2008 2008 1-2Q 2009 1-2Q 2009 2010 2011 NMS-4 Croatia 5.5 5.3 2.7 2.4 3.9 3.9 -5.6 -6.5 -5.1 -5.5 0.0 0.3 2.6 2 Macedonia Bulgaria 6.2 5.9 6.0 4.9 7.0 6.2 -3.5 -1.2 -6.0 -2.0 -1 0 2 3 GDP developments - change in % against preceding year wiiw forecasts Romania 6.3 6.2 8.2 -6.2 -8.5 0.5 2 Albania 6.2 8.0 6.7 5.4 1.5 3.0 5 Bosnia & H. 6.0 5.4 . . -3.0 -1 1 Montenegro 10.7 8.1 . -3.5 -5.0 -1 2 Serbia 6.9 5.4 7.6 -4.1 -3.5 1.0 2

  13. Industrial production: very slow recoveryIndustrial production, July 2008 = 100 * not seasonally adjusted. Source: wiiw Database.

  14. Exports Deficit Imports Foreign trade: very weak recovery EUR million, 2008-2009 Source: wiiw Database, Eurostat.

  15. Exports Deficit Imports Foreign trade: exports flat EUR million, 2008-2009 Source: wiiw Database, Eurostat.

  16. Exchange rates*Flexible exchange rate: drastic real depreciation after September 20082008-2009, EUR NCU, Jan. 2008 = 100 *Values over 100 indicate appreciation over January 2008. Source: wiiw Database, Eurostat.

  17. Exchange rates*De-facto fixed exchange rate: modest real depreciation after September 20082008-2009, EUR NCU, Jan. 2008 = 100 *Values over 100 indicate appreciation over January 2008. Source: wiiw Database, Eurostat.

  18. Exchange rates*Currency board or euro as legal tender: minor real depreciation after September 20082008-2009, EUR NCU, Jan. 2008 = 100 Values over 100 indicate appreciation over January 2008. Source: wiiw Database, Eurostat.

  19. Integration Regional cooperation – trade and investment – Resenstein-Rodan big push policies – wider region European Union perspective – key for stability and also regional cooperation

  20. Conclusions There are no quick fixes Growth model has to be reconsidered due to sustainability and feasibility issues Savings will have to be increased and consumption will have to grow slowly if at all in the medium term Economic policies will have to be changed and structural reforms wil be necessary with the aim to change the real exchange rate

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