Page 39 - Central & Southeast Outlook 2020

Southeastern Europe Executive summary
Growth across most of Southeast Europe is set to decline in 2020, as the region feels the impact of the slowdown in the eurozone.
The International Monetary Fund (IMF) projects growth of 4.0% in three Western Balkan countries, Albania, Kosovo and Serbia, with the lowest growth of 2.5% in Montenegro.
According to the European Bank for Reconstruction and Development (EBRD), growth rates in the region will range from 2.5% in Croatia to as high as 4.2% in Kosovo.
An October 2019 World Bank report points to the slowing of economic activity in the Western Balkans during 2019, driven by a slowdown in both investment and exports. Growth in the region reached a 10-year high in 2018. After dropping to an estimated 3.2% in 2019, it is forecast to rebound to 3.6% and 3.8% in 2020 and 2021 respectively.
Despite some fallout from the slowdown in the eurozone, the growth rate in the Western Balkans — driven partly by the catchup effect — will continue to considerably outstrip that of the EU28, which the World Bank projects to come it at just 1.3% and 1.4% in 2020 and 2021.
The economies of Southeast Europe — both those within and aspiring to join the EU — are increasingly integrated into Europe-wide supply chains. the initial wave of investment into Central Europe has been followed by investments into manufacturing operations, in particular those supplying the auto industry, in the lower wage countries further south and east.
So far, foreign direct investment (FDI) has helped lift the Western Balkan economies. “Despite the eurozone slowdown, FDI inflows to the region remain strong, with these economies benefiting from their favourable geographical location, skilled labour force and lower wage costs than those in central Europe,” says the EBRD.
The outlook for 2020 is uncertain as it remains to be seen what the outcome of the trade tensions between the US and China will be, and to what extent European producers will be affected.
A report from Raiffeisen projects that a deeper global and regional downturn than that seen already is likely to be avoided. “We think that the lowest point is reached around the turn of 2019/2020 and that we
39​ CESE Outlook 2020​ ​ ​www.intellinews.com