Industrial production and rising exports to the European Union are supporting growth in Bosnia and Herzegovina, North Macedonia and Serbia, while Albania, Kosovo and Montenegro are benefitting from a strong rebound in travel or hospitality sectors over the summer months. The recovery is also being driven by the expansion of household consumption, enabled by growing remittances, increases in nominal wages and credit growth in most of the region’s economies.

This was noted by the European Bank for Reconstruction and Development (EBRD) in its latest Regional Economic Prospects report, published on 4 November. This significant upward revision reflects output that was better than expected in the first half of the 2021 and indications of continued growth momentum in the third quarter

As in other EBRD regions, consumer prices in the Western Balkans have been rising gradually since the beginning of 2021 on the back of higher food and energy prices. Fiscal policy has remained accommodative and interest rates are at historical lows to support the economy. The likelihood of tightening is increasing, however, amid persistent growth in prices and inflationary trends in the eurozone.