Economic Growth and Inclusion in the Western Balkans

Transcription

1 Economic Growth and Inclusion in the Western Balkans Gallina A. Vincelette Lead Economist and Program Leader for the Western Balkans The World Bank March 1th, Vienna

2 Overview and Key Messages 1. Economic growth key driver of poverty reduction 2. Households with poor labor market attachment and heavy dependence on transfers 3. Sound economic and structural policies needed for strong, inclusive and sustainable economic growth

3 Strong pre-28 growth good for poverty reduction 3 Economic Growth and Poverty for SEE6, SEE average - Poverty headcount $/day (pop weighted) SEE average - GDP per capita growth (annual %) Source: World Bank Staff estimates based on the harmonized ECAPOV dataset, and WDI.

4 Pre-crisis growth drivers exhausted Real GDP Growth, % Gross fixed capital formation, % GDP Remittances, % GDP Unemployment, %of labor force Poverty rate at US$2.,% f H1 27 H1 214 Q2 28Q Source: World Bank Staff calculations based on national statistical offices. Note: Weighted averages throughout. Poverty rates are for 28 and 212 for ALB, 27 for BiH, and 26 and 28 for MKD. Poverty rate average excludes KOS.

5 Growth not necessarily equitable Growth incidence curves, periods as indicated, annualized growth ALB, KSV, MKD, Growth Incidence Growth at mean Mean growth rate 9% Confidence Interval Growth at median Growth Incidence Growth at mean Mean growth rate 9% Confidence Interval Growth at median Growth Incidence Growth at mean Mean growth rate 9% Confidence Interval Growth at median Percentiles Percentiles Percentiles MNE, SRB, Growth Incidence Growth at mean Mean growth rate 9% Confidence Interval Growth at median Growth Incidence Growth at mean Mean growth rate 9% Confidence Interval Growth at median Percentiles Percentiles Source: World Bank staff estimates based on the harmonized ECAPOV dataset.

6 Transfers dependence and weak labor market attachment, especially among the less well-off 1 Structure of household income by source B4 T6 B4 T6 B4 T6 B4 T6 B4 T6 ALB BIH KSV MKD SRB labor income pension social assistance remittances other Source: World Bank Staff estimates based on the harmonized ECAPOV dataset Note: B4 refers to bottom 4 percentile and T6 to top 6 percentile of income distribution

7 In Labor Market Labor income only about half of HH income due to low employment Only one in five with a job Bosnia and Herzegovina could work but are not working and are not looking for work 7 22 are unemployed 6 4 are employed Out of every 1 people in BiH...are not in labor force (children, pensioners, students, disabled) Source: World Bank staff estimates

8 Youth, women, minorities with poor labor market outcomes Labor force participation (% population aged 1+) Youth Unemployment Rate, % labor force 7 6 Male ALB Total MNE SRB Female MKD KOS BiH ALB BIH KOS MKD MNE SRB SEE6 EU Source: World Bank staff estimates Source: World Bank staff estimates

9 Reliance on remittances and other private transfers, often regressive Emigrants, share of source country population Remittances, percent of household income SEE countries Rest of the World Source: Trends in International Migrant Stock, United Nations B4 T6 B4 T6 B4 T6 B4 T6 B4 T6 ALB BIH KSV MKD SRB Source: World Bank Staff estimates based on the harmonized ECAPOV dataset Note: B4 refers to bottom 4 percentile and T6 to top 6 percentile of income

10 System of extensive public transfers Share of income by source, percent of total household income Size of social benefits, percent of GDP B4 T6 B4 T6 B4 T6 B4 T6 B4 T6 ALB BiH KOS MKD MNE SRB ALB BIH KSV MKD SRB pension social assistance Source: World Bank Staff estimates based on the harmonized ECAPOV dataset Source: World Bank staff calculations

11 Despite being large, public transfers often poorly targeted Social Benefits Coverage of HHs for Top and Bottom Quintiles Social Benefits Targeting to Top and Bottom Quintiles HHs

12 Sound Economic and Structural Policies for sustainable growth and jobs in the Western Balkans Maintain macroeconomic stability Improve quality of the investment & governance environment Eliminate disincentives & barriers to (formal) jobs Enhance equity & efficiency of public services & infrastructure Improve targeting and coverage of social protection systems Sustainable use of natural resources and stewardship of the environment

13 Thank you! For questions: References Arias et al (214) Back to Work: Growing with Jobs in Europe and Central Asia. World Bank Busolo and Lopez-Calva (214) Shared Prosperity: Paving the Way in Europe and Central Asia. World Bank World Bank (214, 21) Regional Economic Report, issues 6 and 7. World Bank World Bank (214) Regional Economic Report No Special Topic First Insights into Promoting Shared Prosperity in South East Europe. World Bank