Western Balkans Trade: Much Untapped Potential

The need to strengthen and improve regional economic cooperation within the Western Balkans has been set as a priority both by the European Union and the Western Balkans countries themselves. The need to do is acute, given that many barriers to trade still remains, as well as the fact that the Western Balkan economies remain small and relatively underdeveloped, with an average GDP per capita which is just one third of the EU average. 

“Increased regional cooperation on trade, infrastructure and the digital agenda holds significant potential for the Western Balkans,” said Martina Larkin, head of Europe and Eurasia and member of the executive committee of the World Economic Forum. “For example, on trade, Western Balkan countries could raise their degree of openness as measured by the share of exports in GDP, from less than 40 per cent to at least 80 per cent, as in other small transitional economies in Europe.” 

Trade openness, in fact, in most Western Balkans countries is relatively low. According to the latest report issued by the European Commission, Untapped Potential: Intra-Regional Trade in the Western Balkans, only Serbia has managed to markedly increase its trade integration because of a steady and robust expansion of goods exports, the share of which in the country’s overall GDP has nearly doubled.  

The EU remains the primary trading partner both for imports (60 per cent) and exports (70 per cent) from the Western Balkans. And yet while Serbia, as well as Albania, Bosnia and Herzegovina, and Macedonia have increased their goods exports to the EU as a share of GDP, exports from Kosovo and Montenegro have declined as they are dominated by the same groups of goods which are also the most prevalent in their intra-regional trade: metals and minerals. 

“To achieve sustainable growth, it will be important to develop strong partnerships with the private sector, which can complement investment from the public sector and ensure projects deliver the necessary impact,” added Mrs Larkin.