In spite of political uncertainty and hotly contested elections in SEE in 2016, economies in the region have shown stable growth on the back of increased investment activity, exports and domestic consumption.
In 2016, all economies in Southeast Europe (SEE) grew in real terms. Romania’s GDP marked the fastest increase, of 4.8% y/y, followed by Moldova with 4.2%, while all other countries posted growth rates below 3.5%. Growth was driven predominantly by exports, which outpaced the GDP growth rate in all countries except Kosovo. Domestic consumption also grew everywhere, but at much lower rates.
In terms of consumer prices, 2016 was similar to the previous year with the majority of SEE countries registering deflation that varied between 1.6% in Romania and 0.1% in Slovenia. Moldova was the only country in the region with significant hike in consumer prices, of 6.4%.
Unemployment rates went down in almost all SEE countries in 2016. They were the lowest in Moldova, Romania and Bulgaria, while elsewhere they stood at above 10%. The other positive trend in the labour market was the increase of salaries in all countries except Croatia. In Romania and Moldova, monthly salaries grew at double-digit rates.
Industrial production went up in SEE in 2016, most significantly in Slovenia, Bulgaria, and Croatia. Construction, calculated as the annual change in the number of building permits, also showed improvement with the highest growth rate in Albania, Slovenia and Montenegro. International tourism in the region boomed – all countries reported strong growth of incoming visitors, most notably Moldova with a 28.6% y/y rise and Bulgaria with 19.9%.
Foreign investment activity in most SEE countries improved in 2016, but there were also countries like Bulgaria, Kosovo, and Montenegro, where FDI fell sharply.
According to the International Monetary Fund (IMF), the outlook for the SEE economies remains positive. Growth rates in the next five years will be steady at levels close to those registered in 2016. In the EU member states in the region, except Romania, the rise is projected at 2.5% or lower and will further decelerate, while the non-EU countries are expected to grow at faster rates – up to 4.0% – by 2021.