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WB analysis: Big cities in the Balkans, lack of sustainable development

2024-04-11 13:40:37Biznes SHKRUAR NGA REDAKSIA VOX

WB analysis: Big cities in the Balkans, lack of sustainable development

The Balkan region currently faces challenges of sustainable development of large cities, the World Bank highlighted today in the Regional Report.

According to the WB, countries should intervene on three main fronts, in order to green and strengthen cities in the Western Balkans.

First, the creation of cities as compact as possible would positively affect growth, reduce costs in the provision of public services and improve the environmental situation.

Second, reforms and investments aimed at expanding public transport systems and switching to greener, more energy-efficient buildings would reduce air pollution, which is the cause of thousands of premature deaths every year in the region.

Thirdly, extreme heat in cities, with temperatures that in the summer season are 4.5-7.5°C higher than in the surrounding rural areas, will negatively affect productivity and human health. Municipalities must adopt measures to refresh physical spaces through better urban design and planning and special investments.

The slight increase in projected economic growth values ​​in the medium term reflects cautious optimism as the Western Balkans have weathered a series of shocks over the past few years.

However, the risks to the outlook continue to lean to the downside. Continued weak growth in the world economy, especially in the Eurozone, would translate into lower levels of investment and trade with countries in the region. In addition, the projected growth values ​​are also negatively affected by internal factors, such as increasing geopolitical tensions, emigration, electoral uncertainty and ongoing inflation.

"After several turbulent years as a result of the COVID-19 pandemic and the energy crisis, it is impressive to see how economic growth in the Western Balkans is reaching pre-pandemic levels, while poverty continues to decrease," said Xiaoqing Yu, World Bank Managing Director for Western Balkans. However, the current progress is not enough to meet the aspirations of the citizens and improve living standards towards those of the European Union. The new European Union Growth Plan for the Western Balkans represents a good opportunity to promote economic development through reforms and investments, especially for the green economy".

The six-billion-euro plan will help strengthen economic ties between the region and the European Union, its largest trading partner, and implement reforms to increase economic integration within the Western Balkans region. According to the World Bank, improvements such as reducing customs clearance times and modernizing payment systems in the countries of the region could lead to significant economic benefits for these countries.

Investing in the green transition and improving the livability of cities in the Western Balkans could also help revive regional growth, according to the World Bank report.

"Cities are where economic development really happens. They bring workers closer to jobs, boosting productivity, increasing opportunities and facilitating the exchange of goods and ideas," said Natasha Rovo, World Bank Senior Economist and one of the report's lead authors. "Cities in the Western Balkans have shown resilience in recent years. However, they have found it difficult to transform into engines of economic growth, not only due to the effects of structural and demographic challenges, but also due to vulnerability to climate change. Investments in the green economy can be a good opportunity to boost future growth."

Economic growth in the Western Balkans is projected to be higher in 2024, and to accelerate in 2025, returning to average pre-pandemic levels. The countries of the region must continue with the implementation of reforms in order to narrow the development gap with the countries of the European Union and improve living standards. This includes increasing investment in greener cities, enabling them to contribute more efficiently to overall economic development, says the World Bank's new Economic Report on the Western Balkans, published today.

Economic activity in the Western Balkans is expected to grow by 3.2 percent this year, or 0.2 percentage points higher than the growth projected by the World Bank in the previous edition of the report, and to follow with a growth of 3.5 percent in 2025.

Individual forecasts for the six Western Balkan economies: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia, are included in the World Bank's Economic Update for Europe and Central Asia, published today.


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