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Economic growth in the Western Balkans is projected to slow to 3.0 percent in 2025, from 3.6percent in 2024, due to a continued weak external environment coupled with heightened domestic pressures in several countries.
A modest Euro-area recovery should help to support improved regional growth by boosting investment and supporting exports, though at a lower rate than in recent years, with a full rebound expected only in 2027.
The EU Growth Plan offers a strategic path for the Western Balkans to overcome structural barriers and boost long-term growth through continued reform efforts in five key areas: digital infrastructure; regulatory quality; government effectiveness; financial development; and female labor force participation.
The spotlight of this edition of the Western Balkans Regular Economic Report focuses on the jobs challenge. The region faces a labor market paradox — labor shortages coexist with persistently high unemployment (above 10 percent), and relatively low labor force participation (below 55 percent), especially for women, youth, and the elderly. In addition, the working-age population has already shrunk markedly and is projected to fall by nearly one-fifth by 2050. Over the next five years, if current population, growth, and labor market trends continue, the region could face a shortfall of 190,000 workers.
A jobs strategy for the region should aim to raise participation, build future-ready skills, improve job quality and inclusion, boost firm productivity and competitiveness, and harness digital and green opportunities through upskilling and flexible work models.
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