World Bank: Western Balkans growth to accelerate in 2026

The World Bank says economic growth in the Western Balkans is set to accelerate in 2026 and firm further in 2027, supported mainly by household consumption and investment, according to a new Regular Economic Report for the region published today. The study also finds the regional economy has remained resilient to shocks and is gradually closing gaps with the European Union.

The report projects average growth across Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia to reach 3.1 percent in 2026, up from 2.6 percent in 2025. Growth is forecast to rise to 3.4 percent in 2027 and to remain at that level in 2028.

“In a time of increased geopolitical uncertainty and weak growth among key trading partners, the Western Balkans has again shown economic resilience. But resilience alone is not enough for the region to catch up to the European Union’s average incomes or to create the quality jobs that people need. Jobs come from dynamic private sectors, and the next phase of growth requires efficient, predictable regulation and the removal of trade barriers, not only at the border but behind it,” said Sjaoqing Yu, Director of the World Bank for the Western Balkans.

The report notes that successive rounds of tariff liberalization have helped integrate the Western Balkans into global trade. Trade in goods and services reached 107 percent of regional GDP in 2025, above the EU average of 90 percent, and services exports grew fourfold between 2010 and 2025. The authors argue the next wave of reforms should help firms make fuller and more sustainable use of that market access by cutting behind-the-border costs.

Barriers, costs and the potential gain

Average applied tariffs on all goods imported into the Western Balkans stand at roughly 6 percent, while non-tariff measures add an estimated additional 10 percent to import costs. These extra costs are particularly high in some agri-food segments, exceeding 20 percent. Restrictions on cross-border services are estimated to add about 29 percent to costs. The report’s simulations indicate that removing half of the remaining import barriers — such as licensing and authorization requirements, repeated inspections, certification procedures and local presence rules — could raise GDP by up to 12.5 percent over the medium term.

Higher import costs also make it harder for exporters from the region to enter and remain in foreign markets. Only about one-third of new export-oriented firms survive their first year, and just 1 to 4 percent reach a fifth year of operation. That matters for jobs: trade-oriented firms employ a large majority of manufacturing workers in the region, tend to be larger and pay better than comparable firms serving only the domestic market.

To translate improved market access into lasting jobs and higher incomes, the report urges policy makers to focus on better—not merely smaller—regulation: simplify and digitalize procedures, apply risk-based inspections, recognize aligned standards and qualifications, and retain protective measures that serve legitimate public objectives.

Photo: press material from the event