The Western Balkan economies have demonstrated resilience in the face of the COVID-19 pandemic. Despite challenges such as surging energy and food prices, tightening financial conditions and ongoing geopolitical uncertainties, the region’s economies maintained a trajectory of growth, albeit at an increasingly modest pace since Russia’s invasion of Ukraine in 2022. The six Western Balkan economies grew by a remarkable 7.9% in 2021, after which the growth rate slowed to 3.4% and 2.6% in 2022 and 2023, respectively.
Since 2021, the region’s economies made important progress in digital transformation and infrastructure, with broader Internet access, enhanced electronic government services, and improvements in transport infrastructure. Further, the GDP per capita of the six Western Balkan economies rose by 80% between 2003 and 2022, according to the OECD’s Economic Convergence Scoreboard for the Western Balkans published in 2023. The road ahead demands more. In 2022, GDP per capita in the Western Balkans stood at 38% of the EU and OECD averages, and over the past two decades this gap has narrowed by only 11 percentage points. If the Western Balkan economies were to maintain their current growth rates, it would take at least 50 years to achieve economic convergence with the EU and the OECD.
These figures underscore the need for strong, inclusive and sustainable growth for people across the six Western Balkan economies. To advance towards this goal, we propose three priority areas:
First, governments should address barriers – including informality, corruption, inefficient state-owned enterprises – that distort the level playing field for businesses to promote trade and investment.
Second, revamping education systems and designing policies to foster a conducive environment for talent retention is necessary to address labour shortages.
Third, stepping up decarbonisation and conservation efforts, including through measures aimed at facilitating private sector access to green finance, is key to further boost sustainable economic growth.
In line with these policy priorities, the new Growth Plan for the Western Balkans, adopted by the European Commission in November 2023, aims to provide a structured approach to increase the pace of much-needed reforms and promote faster economic convergence with the EU.
The Western Balkans Competitiveness Outlook 2024 serves as an indispensable resource for policymakers. Offering in-depth assessments across 15 key policy areas for bolstering economic competitiveness, the Competitiveness Outlook provides comprehensive guidance to navigate economic reforms, enhance regional co-operation and helps the Western Balkan economies in aligning their legal frameworks and policies with those of the EU.
Now in its fourth edition since 2016, this publication tracks the implementation of reforms based on previous policy recommendations, and measures progress towards OECD standards and the EU acquis.
This year, the Competitiveness Outlook focuses on mainstreaming the green and digital transitions horizontally across all covered policy areas, by identifying measures essential to future-proofing the region’s economies. The publication's findings are accessible for the first time through a landmark interactive digital tool: the Western Balkans Competitiveness Outlook Data Hub. By providing policymakers with greater ability to assess and benchmark economic reforms seamlessly, the Data Hub aims to become a catalyst for designing policies that drive competitiveness and convergence.
Co-funded by the European Union, the Competitiveness Outlook and the accompanying Data Hub are the culmination of extensive collaboration. Alongside inputs from hundreds of representatives from the Western Balkans’ governments, statistical offices and other regional stakeholders, the work has benefitted from a close partnership with the European Commission’s Directorate – General for Neighbourhood and Enlargement Negotiations and EU delegations across the region. Thank you to all those who have contributed to this collective effort.
We are confident that the Western Balkans Competitiveness Outlook 2024 will offer valuable insights and direction for implementing the new Growth Plan through the Western Balkan economies’ reform agendas, helping to accelerate the six Western Balkan economies’ EU integration, enhance sustainable economic growth, attract foreign investments, and leverage the opportunities of the Common Regional Market as a gateway to the Single Market.
Mathias Cormann
Secretary-General
OECD
Olivér Várhelyi
Commissioner, Neighbourhood and Enlargement
European Commission