Download South East Europe Economic Outlook and Trade Integration

CEFTA Week 2016
South East Europe Economic Outlook and Trade
Integration
December 2016
Despite the external context,
growth in SEE6 is firming up
Growth strengthened from 2.2 percent in 2015 to 2.7 percent in 2016
on the back of domestic demand.
Real GDP growth, 2014, 2015 and 2016f, percent
Decomposition of real GDP growth, 2016,
percent
Source: World Bank staff calculations based on data from national statistical offices.
Where fiscal consolidation gained momentum,
public debt starts to recede
SEE6 are committed to fiscal consolidation, placing public debt on a declining
path, except in Montenegro.
Public and publicly guaranteed debt, 2007,2015,2016, in
percent of GDP
Fiscal developments and outlook for the SEE6
Source: National statistical offices, Ministries of Finance, World
Bank staff projections.
Source: National statistical offices, Ministries of Finance, World
Bank staff projections.
Note: average weighted by GDP
POSITIVE NEAR-TERM OUTLOOK
Solid growth sustains by 2018, but with downside
risks to the recovery
Real GDP Growth, percent, 2015-18
*
*
Risks and opportunities
• External
o Volatility of international
financial markets
o Tightening monetary policy
by the US Fed
o Slower-than-projected growth
in major export partners
o Continued weakness in
Greece
o Political tensions in Turkey
•
Source: Central Banks, National statistical offices, World Bank staff
projections.
Note: SEE6 is a weighted average.
Note: * This designation is without prejudice to positions on status,
and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo
declaration of independence
Domestic
o Elections and political
uncertainty
o But, new political cycle offers
an upside potential
Heightened risks underscore the urgency of
structural reforms to reinforce the nascent recovery
Five areas of reforms are particularly urgent:
• Eliminate disincentives and barriers to formal
employment
• Improve the business climate and governance
• Enhance the equity, quality and efficiency of public
services and social protection systems, while
reducing the state footprint
• Deepen global integration
• Ensure sustainable use of energy and natural
resources and stewardship of the environment
FURTHERING REGIONAL TRADE
INTEGRATION TO SUPPORT
ECONOMIC GROWTH AND
HIGHER LIVING STANDARDS IN
CEFTA ECONOMIES
Why Regional Integration Matters
• Integration into regional and global markets has been a fantastic
engine for growth and increasing living standards across the world
• Countries, particularly small economies like in the Western Balkans,
need sustained economic grow first, and for this they need more
trade in goods and services
• Countries that have achieved high income status have done so
through connecting to global markets through trade and investment
• Trade and investment integration is an important tool to spur
productivity gains through increased competition, greater exposure to
frontier technology
• Regional integration is stepping stone for Western Balkan to help
strengthen the capacity of the governments for EU integration and
domestic companies to compete in the EU market
Encouraging signs of transformation in recent
years
•
Growing from a low base,
exports of the Western
Balkans to the EU have
quadrupled since 2005 and
their share in total EU
imports doubled
•
Countries have been able leverage opportunities of
connecting to Global Value Chains, notably in the automotive
industry, where Serbia and Macedonia have become
important suppliers and producers of vehicles and their
components
Trade Integration reform agenda
• As noted, unwavering commitment to address remaining external
vulnerabilities, lower fiscal imbalances and implement structural
reforms (including on business environment and SOEs reforms) will
be key for CEFTA Parties to sustain progress towards higher living
standards.
• Furthering regional cooperation and trade integration, including with
respect to CEFTA Trade Facilitation and Trade in Services additional
Protocols, will support and complement these efforts and help
expand business opportunities for companies in the Balkans
Thank you!
www.worldbank.org/eca/seerer