Western Balkans Regular Economic Report, No. 20, Fall 2021 : Greening the Recovery
Fiscal balances have started to improve as a result of a stronger economic performance, but it will take further effort to replenish buffers. The growth recovery is contributing to buoyant revenue collection across the region, particularly in value...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/900381634670558017/Greening-the-Recovery http://hdl.handle.net/10986/36402 |
| Summary: | Fiscal balances have started to
improve as a result of a stronger economic performance, but
it will take further effort to replenish buffers. The growth
recovery is contributing to buoyant revenue collection
across the region, particularly in value-added tax
collections, as domestic consumption strengthens. Similarly,
a leveling off of public spending in 2021 after the
countercyclical surge of 2020 is helping on the expenditure
side. As a result, all countries except Bosnia and
Herzegovina expect to see a narrower fiscal deficit in 2021,
with the average deficit reduced by 2.7 percent of GDP
year-on-year. However, the deficits across all economies of
the Western Balkans are still above pre-pandemic trends, and
the legacy of the pandemic is a stock of public debt that
has now reached historic highs in all countries except
Serbia and Bosnia and Herzegovina. As the recovery from
COVID-19 takes hold, greater efforts will be needed to
mobilize and diversify sources of revenue and to streamline
expenditure programs, which in turn would help address
fiscal vulnerabilities that have arisen during the crisis.
In line with global conditions, inflationary pressures in
the Western Balkans are on an upward trajectory. Average
inflation is projected to reach 2.3 percent in 2021 from 0.9
percent in 2020. On the external side, strengthening demand
in advanced economies is driving commodity prices upward and
putting pressure on COVID-19-strained logistics networks and
global value chains. Similarly, the faster-than-expected
recovery in domestic consumption across the region has
placed upward pressure on domestic costs, particularly in
labor markets during the summer tourism season. |
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