World Bank forecasts Western Balkans growth at 2.8 percent in 2026 and calls for reforms to unlock 2.8 million workers

The World Bank has published its latest Western Balkans Regular Economic Report, forecasting that combined growth across Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia will remain subdued at 2.8 percent in 2026, which is 0.3 percentage points below previous projections, before edging up to 3.2 percent in 2027. The report attributes the weaker outlook to the ripple effects of the conflict in the Middle East, persistent inflation, and heightened uncertainty, and says expanding workforce participation will be essential to sustain reform momentum and ease labor shortages. According to the report, the region is aging rapidly, with at least one in five people expected to be over 65 within the next decade, while working-age people are continuing to seek better pay and prospects abroad. At the same time, labor shortages are binding in key sectors even though many people remain out of work or have stopped looking for jobs. The World Bank estimates that matching labor force participation rates to those in comparable European Union countries would add more than 2.8 million workers, while raising women’s employment alone could lift annual growth by around 0.35 percentage points. The report points to tax and benefit rules that can make employment financially unattractive, and calls for affordable childcare and eldercare, better job training, and more flexible and decent working conditions, including for online platform workers.