Economic Growth in Western Balkans to Rise: Trade Costs Threaten Jobs and Exports

World Bank Division Director for the Western Balkans Xiaoqing Yu said resilience alone will not bring regional incomes closer to EU averages or create the quality jobs people need.

Economic growth across the Western Balkans is projected to rise from 2.6% in 2025 to 3.1% in 2026, supported by consumption and investment. The World Bank expects growth to reach 3.4% in 2027 and remain at that level in 2028 across Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The region has weathered recent shocks and continues to move closer to the European Union, though better jobs will depend on businesses being able to compete more effectively in international markets.

World Bank Division Director for the Western Balkans Xiaoqing Yu said resilience alone will not bring regional incomes closer to EU averages or create the quality jobs people need. Dynamic private businesses are central to job creation, and the report argues that predictable rules and lower trade barriers can help them grow. Those barriers exist at borders and inside domestic markets, where regulation can add costs and delays.

Trade in goods and services reached 107% of regional GDP in 2025, compared with an EU average of 90%, and services exports quadrupled between 2010 and 2025. The World Bank's Western Balkans Regular Economic Report says the next step is to help businesses make fuller use of that access by reducing unnecessary costs behind the border. Its analysis points to regulatory reforms as a way to improve competitiveness and support job creation.

Rules add costs beyond tariffs

Average tariffs on imported goods are about 6%, while non-tariff measures add an estimated 10% to import costs. In some agri-food sectors, these additional costs exceed 20%, and restrictions on cross-border services are estimated to add costs equivalent to 29%. Licensing, repeated inspections, certification procedures and local-presence rules can all make it harder for companies to trade.

The report's simulations suggest that removing half of the remaining import barriers could raise regional GDP by as much as 12.5% over the medium term. That estimate reflects the potential gains from making trade procedures simpler and more predictable. Lower costs on imported inputs could also help local firms compete in export markets.

Exporting firms support better jobs

Higher import costs can make it harder for businesses to begin exporting and remain in international markets. Only about one-third of new export ventures survive their first year, and just 1% to 4% reach their fifth year. The report highlights the stakes for employment because trading firms account for most manufacturing jobs and tend to be larger and pay better than firms serving only domestic customers.

The report calls for better-designed regulation rather than simply less regulation, with procedures streamlined and digitized to reduce unnecessary burdens. It recommends risk-based inspections and recognition of aligned standards and qualifications to make compliance more efficient. Safeguards that serve legitimate public objectives can remain in place as governments improve how rules are applied.