BAKU, Azerbaijan, May 13. Economic growth in the Western Balkans is expected to decelerate over the next two years, reflecting spillovers from weaker activity in advanced European economies and rising political instability, particularly in Serbia, according to the latest forecast by the European Bank for Reconstruction and Development (EBRD), Trend reports.
The region’s GDP growth is projected to slow from an estimated 3.6 per cent in 2024 to 3.2 per cent in 2025, before slightly recovering to 3.4 per cent in 2026. The downward revision underscores both global and regional headwinds.
"Growth in the Western Balkans accelerated slightly from 3.4 per cent in 2023 to 3.6 per cent in 2024," the EBRD noted, pointing to strong private consumption, fuelled by rising wages, and a steady pace of public investment as the key drivers.
Tourism remained a bright spot, especially in Albania and Kosovo, and to a lesser extent in Montenegro, helping to cushion some of the external pressures. However, the region’s goods exports have remained subdued due to continuing weak demand in its largest trading partner, the European Union.
The outlook for 2025 has been dampened further by the global implications of newly introduced US tariffs. "Growth is projected to fall to 3.2 per cent in 2025 on the direct and, more importantly, indirect effects of tariffs newly introduced by the US," the bank warned, while identifying a modest rebound to 3.4 per cent in 2026.
Export-oriented economies such as Bosnia and Herzegovina, North Macedonia, and Serbia are expected to be more exposed to indirect shocks, especially through their export links to the eurozone. Serbia’s trade relationship with China may also come under strain.
In contrast, tourism-dependent economies – including Albania, Kosovo, and Montenegro – may see less severe impacts, although a potential slowdown in European tourism could still pose a risk.
