(The World Bank corrects the figure for Serbia's recession to
1.5 pct from 2.5 pct In first paragraph, recasts paragraph 4 to
By Daria Sito-Sucic
SARAJEVO Nov 6 The Western Balkans is facing a
double-dip recession this year led by a 1.5 percent contraction
in Serbia, and recovery in 2013 will be "very slow", the World
Bank warned on Tuesday.
Its regional coordinator also said that debt in some
countries was too high.
"I would say that debt in Montenegro, Serbia and Albania is
at very dangerous levels, particularly in Albania at 60 percent
(of GDP) but it's increasing very rapidly in Serbia and
Montenegro," Jane Armitage, World Bank coordinator for the
Western Balkans, told Reuters in an interview.
Armitage forecast 1.5 percent economic decline in Serbia,
the region's biggest economy, which struggles to stimulate
growth while cutting back on its spiralling budget deficit.
"This prolonged uncertainty in the euro zone means that we
are facing the dreaded double-dip recession," Armitage said.
"For this year at this point, we would predict the Western
Balkans is in recession."
Albania and the former republics of Yugoslavia have seen
exports fall and foreign direct investment dry up due to the
debt crisis in the euro zone, the Balkan region's main source of
trade and investment.
Remittances from citizens overseas are down, and the harsh
winter and long, hot summer hit the agricultural sector and
hydro-electric production, Armitage said.
Only Kosovo, a new country and small economy of 1.7 million
people, is likely to continue growing thanks to a low level of
integration with the European market, low debt rate and heavy
investment in infrastructure, Armitage told Reuters.
But elsewhere the situation was poor.
"It will be very slow growth next year," she said of the
region. "Deficits are everywhere increasing so the countries are
facing really tough times.
"They need to continue on the path of fiscal consolidation
and start to bring their debt levels down but at the same time
growth is so low and there is such need for infrastructure
Serbia's central bank said last month that national output
would likely shrink by 1.5 percent. Unemployment has hit a
staggering 25 percent.
The Socialist-led government is targeting growth next year
of 2 percent, while also pledging to cut the budget deficit from
a projected 6.2 percent in 2012 to 3.6 percent in 2013.
It needs to rein in the deficit to secure a new credit deal
with the International Monetary Fund, which is sending a mission
to Serbia on Nov. 13.
Armitage stressed that Serbia must clinch a deal with the
IMF before the World Bank gives the green light to a $400
million budget support loan. She lamented the slow pace of
reform as a condition of World Bank support.
Bosnia, Armitage said, needs to undertake long-delayed
structural reforms before the bank makes operational $200
million in loans.
($1 = 0.7823 euros)
(Editing by Matt Robinson. Editing by Jeremy Gaunt.)