Page 6 - bne IntelliNews SE Outlook Regions 2024

Executive summary
Following a challenging 2023 marked by energy and inflation crises triggered by the conflict in Ukraine, the economies across Southeast Europe appear poised for a modest rebound in 2024.
There was a notable deceleration in the growth of economies in Southeastern Europe during 2023, primarily attributed to a weakened external environment and the impact of inflation on household spending and confidence.
There have already been some positive signs in the latter part of the year, with real wages and consumer confidence recovering due to declining inflation. For the EU members in the region, public investment received a boost from the disbursement of EU funds. This is expected to play a crucial role in driving growth in the coming years.
Growth for the region is estimated to have hovered around the 2% mark in 2023, with stronger performances from a couple of the smaller
Western Balkan states – notably Kosovo and Montenegro – while Moldova was particularly badly battered by the crises, and Bosnia also suffered from slow growth linked to political instability.
While there have been bright spots such as the recovery of tourism post-pandemic, the region’s performance going forward will depend to a large extent on the performance of key trading partners in Western Europe, where growth has been sluggish.
The picture looks better this year, with local governments and international financial institutions (IFIs) projecting a recovery, albeit a gradual one, during the year.
As the hikes in energy prices, and to a lesser degree, food prices, tapered off, inflation began to decline, though it remains stubbornly high in some countries.
This is partly a product of the decline in oil and gas prices to pre-war levels. Amid the hikes in 2022 and 2023, business and consumers have been forced to adapt; gas consumption declined in much of the region, with the fall in gas consumption in Moldova being particularly dramatic.
The war in Ukraine also sparked a race to diversify sources of gas and reinforce energy security after the shock caused by the invasion of Ukraine and related sanctions. Countries across Southeast Europe are looking to build new gas transportation infrastructure, with most looking south to Azerbaijan as an alternative source to Russia. That inspired the opening of the new Bulgaria-Serbia gas interconnection at the end of 2023, while North Macedonia is also exploring options to improve its
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