THE IMPACT OF COVID-19 ON WESTERN BALKANS ECONOMIES

Abstract

Western Balkans, consisting of Bosnia and Herzegovina, Serbia, Kosovo, North
Macedonia, Albania and Montenegro, is one of the regions that have been heavily
affected by the Covid-19 pandemic. Although the numbers are relatively low compared to
other countries affected by the virus, the region’s fragile political and economic
circumstance have made it vulnerable to the pandemic. The violent breakup of
Yugoslavia continue to affect the region’s international relations and domestic politics.
Furthermore, Western Balkan states are some of the few European countries that are still
not members of the European Union (EU) .
Every day, people are losing jobs and income, with no way of knowing when normality
will return. The Western Balkans rely heavily on the steady inflow of remittances, which
financing domestic demand and investment. Remittances, which constitute 10% of the
GDP in these countries , are likely to diminish because of travel restrictions and
increased unemployment in the countries of Western Europe. [1]. The World Bank
projects a US$110 billion decline in remittances this year, which could mean 800 million
people will not be able to meet their basic needs [2]. Due to business shutdowns, supplyside
disruptions, reduce household incomes, depress demand these countries results in
fall in gross domestic product.
To mitigate the social impacts of the crisis, governments in all six countries have
introduced measures to support households and businesses. To ease the effects of the
pandemic, governments in the region have turned towards international institutions such
as the World Bank, International Monetary Fund (IMF) and the EU for financial assistance.
As these countries do not have sufficient health infrastructure to deal with a wide
number of cases, these support have been useful to contain the spread of the virus.