Balkan Barometer

Balkan Barometer 2023 Business Opinion

Key Findings

The 2023 Balkan Barometer surveys were conducted between early February and early April 2023 in Albania, Bosnia and Herzegovina, Kosovo*, Montenegro, North Macedonia and Serbia. The Public Opinion survey posed 79 questions to 6027 citizens and the Business Opinion survey presented 80 questions to 1211 business owners, managers, or executives. As in the previous editions, the answers of survey respondents have been systemised, analysed, and presented in the two reports – Public Opinion Survey and Business Opinion Survey.

The 9th edition of Balkan Barometer comes at a difficult time for the region, Europe, and the world. After the pandemic and its considerable impact on economies and citizens' lives, the world, Western Balkans as well, are faced with several consequences since the start of the war in Ukraine in 2022. This edition of the Balkan Barometer tries to explore perceptions of citizens on a large variety of components which affect their daily operations and lives.

Sharp rise of support to regional cooperation

Regional cooperation is perceived as important by 74% of businesses, marking a 5% increase since last year, and a 23% increase since 2016. The highest support comes from Albania with 85%, and Bosnia and Herzegovina with 84% where we note a 9% increase since last year.

Economy	Not important at all	Not very important	Important	Very important	DK/refuse
How do you consider the regional cooperation in the Western Balkans?
Albania	3	12	43	42	0
Bosnia and Herzegovina	4	11	60	24	0
Kosovo*	1	16	54	29	0
North Macedonia	12	24	37	27	0
Montenegro	11	20	35	29	7
Serbia	14	16	46	23	0
Western Balkans	9	16	47	27	1

More businesses note positive impact of regional cooperation

Western Balkan businesses are ever more noticing the benefits of regional cooperation. Half of respondents conveyed a positive impact of the Regional Roaming Agreement (RRA), which brought roaming free Western Balkans, on their businesses, citing notable benefits such as business cost reduction (16%) and improved communication with partners (34%). In 2022, 43% of businesses noted the positive effect of RRA. Majority of businesses (56%) expect great benefits from travelling only with an ID card in the region.

Economy	Reduced cost of business operations	Eased communication with partners in the region	Had no impact at all	I am not aware of any roaming free regime
How did the roaming free regime impact your business operations within the Western Balkans?
Albania	15	41	41	3
Bosnia and Herzegovina	11	45	33	11
Kosovo*	58	37	5	1
North Macedonia	9	36	52	3
Montenegro	18	30	45	7
Serbia	12	28	55	5
Western Balkans	16	34	44	5

Economy	Yes	No	DK/refuse
Will it benefit your business if travel across the region were possible with a valid ID card only?
Albania	79	15	6
Bosnia and Herzegovina	72	26	2
Kosovo*	54	43	2
North Macedonia	48	50	2
Montenegro	48	43	9
Serbia	45	53	1
Western Balkans	56	42	3

Support to EU membership higher than ever

The level of support for EU membership in the Western Balkans has witnessed a substantial increase since 2022, rising by 11 percentage points to reach 71% at the regional level. This marks the highest level of support perceived by Western Balkan citizens since 2015, when 56% of respondents cited that EU membership is good for their economy. Similarly as in 2022, Albanian businesses showed highest support (96%), and Serbian least with 62%, but again making the crucial 13% improvement since 2022, and more than a double since 2016 when it was 29%.

Economy	Bad	Neither good nor bad	Good	DK/refuse
How do you see EU membership of ECONOMY?
Albania	0	4	96	0
Bosnia and Herzegovina	4	20	74	1
Kosovo*	5	22	72	0
North Macedonia	6	17	76	0
Montenegro	3	23	71	4
Serbia	6	31	62	1
Western Balkans	5	23	71	1

Satisfaction index rises amid growing concern of cost increase, labour shortage, brain drain and access to finance

Western Balkan businesses see the situation as slightly more favourable than the previous year, as their satisfaction index rose by 5 points to 58

Economy	2023 BBSI	2023 BBSI - Present situation index	2023 BBSI - Expectation index
Balkan Business Sentiment Index (BBSI) - 2023
Albania	64	63	65
Bosnia and Herzegovina	42	44	37
Kosovo*	70	70	69
North Macedonia	54	55	52
Montenegro	54	54	55
Serbia	63	62	66
Western Balkans	59	58	59

However, 77% of businesses say that their operational costs have increased, 6% more than in 2022. Only a third of businesses are anticipating an improvement in their economic situation in the next 12 months. Macroeconomic instability, availability of labour force and brain drain/emigration are identified as the most concerning factors affecting business growth in the Western Balkans. In 2022, Covid-19 pandemic was positioned first, followed by macroeconomic stability and access to financing and informal economy.

Economy	Decreased	Remained unchanged	Increased	DK/refuse
How have your labour and other costs (e.g. energy, etc.) changed over the past 12 months?
Albania	2	10	89	0
Bosnia and Herzegovina	3	19	78	0
Kosovo*	7	31	62	0
North Macedonia	1	7	92	0
Montenegro	1	23	75	2
Serbia	1	25	73	0
Western Balkans	2	20	77	0

Economy	Deteriorate	Remain unchanged	Improve	DK/refuse
How do you expect the general economic situation in your economy to develop over the next 12 months? Will it mostly deteriorate, remain unchanged or improve?
Albania	14	52	33	1
Bosnia and Herzegovina	44	36	11	8
Kosovo*	8	55	37	0
North Macedonia	32	37	30	0
Montenegro	23	49	23	6
Serbia	15	42	42	1
Western Balkans	22	43	33	2

Economy	Western Balkans
Can you tell how problematic are these different factors for the operation and growth of your business? Can you please rate each?
Macroeconomic instability	2,1
Access to land and title or leasing of land	2,9
Telecommunications, transportation, electricity and investment in broadband	2,6
Customs, tax rates and trade regulations	2,6
Availability of labour	2,2
Informal economy and anti-competitive practices of other competitors	2,4
Skills and education of available workers	2,5
Social infrastructure which should enable women to accept and develop leading business positions	2,8
Political or social instability	2,4
Business licensing and permits	2,7
Access to financing and cost of financing	2,4
Labour regulations	2,7
Functioning of the judiciary	2,8
Corruption	2,5
Brain drain/ emigration	2,2
Discrimination based on ethnicity, gender, age, sexual orientation, or other	3,1
Negative image of your economy or the Western Balkans region	2,8

In view of the challenges faced, 69% of companies use their own funds and retained earnings to finance their operations, showing a considerable contraction of access to finance.

Economy	Internal funds/retained earnings	Borrowing from domestic sources (i.e., state development banks, local private commercial banks and state owned banks)	Borrowing from the banks abroad	Equity investment	Venture capital	Money lenders or other informal sources (other than family/friends)	Business angel funding	Factoring arrangements or selling accounts receivable
Have you used any of the following sources of capital over the past 12 months?
Western Balkans	69	38	5	5	11	5	2	5
Albania	97	36	5	1	0	7	0	0
Bosnia and Herzegovina	48	47	8	3	16	4	5	4
Kosovo*	61	65	5	5	13	13	4	2
North Macedonia	47	29	4	2	3	3	1	4
Montenegro	30	27	4	5	6	7	0	1
Serbia	80	35	4	7	14	4	2	9

Increased confidence in competitiveness and exports, though capacities required

Businesses are quite confident when it comes to their capacities to compete in the region (80%) – 1 point less than in 2022, and in the EU (73%) – 4 points less than in 2022.

Economy	Totally disagree	Tend to disagree	Tend to agree	Totally agree	DK/refuse	Mean
To what extent do you agree with the following statement - My company's products, goods and services can compete well with products, goods and services from the region
Albania	3	20	45	32	1	3,1
Bosnia and Herzegovina	6	9	39	39	5	3,2
Kosovo*	1	20	64	15	0	2,9
North Macedonia	7	8	35	45	4	3,2
Montenegro	9	11	18	49	14	3,2
Serbia	4	9	27	55	5	3,4
Western Balkans	5	11	35	45	4	3,3

Economy	Totally disagree	Tend to disagree	Tend to agree	Totally agree	DK/refuse	Mean
To what extent do you agree with the following statement - My company s products, goods and services can compete well with products, goods and services from other EU countries.
Albania	5	27	47	21	1	2,8
Bosnia and Herzegovina	7	13	37	37	5	3,1
Kosovo*	1	21	63	15	0	2,9
North Macedonia	14	14	30	36	5	2,9
Montenegro	11	15	19	43	13	3,1
Serbia	5	12	25	51	6	3,3
Western Balkans	6	15	33	40	5	3,1

Serbia scores the highest when compared to other economies with 82%, while in 2022, Kosovo was the most confident WB economy in terms of its regional competitiveness with 92%.

40% of companies do not have any plans to export, while 30% of companies claim their goods/services are non-exportable. Another 23% does not have the capacities to export. In 2022, the primary reason for companies not to export related to their goods/products not being suitable for export (41%), followed by the lack of any plans or interest to export (34%), and lack of capacities to export (17%). Regarding trade in the region, 43% think that cross-border transaction costs are too high – 9 points increase since 2022. Reversely, in 2022, 70% of respondents from Kosovo* considered cross-border/boundary costs to be too high amongst WB economies – which is down to 49% in 2023.

Economy	We don't have any plans/interest to export	We don't have capacities to export	We don't know how to export	Our goods/services isn't/aren't suitable for export	We don't know how to find foreign partners	There is no competent authority in your economy that could provide relevant information on export procedure	Complicated administrative procedures	Linguistic barrier	Other	DK/refuse
Why doesn’t your company export?
Albania	29	9	1	55	4	1	4	0	1	0
Bosnia and Herzegovina	30	33	1	30	7	2	2	1	1	2
Kosovo*	38	46	15	4	3	1	1	0	0	0
North Macedonia	42	15	0	36	4	2	4	0	1	3
Montenegro	35	10	1	42	3	1	5	0	3	5
Serbia	47	23	3	22	7	3	2	0	0	8
Western Balkans	40	23	2	30	5	2	3	0	1	4

Economy	Yes	No	Not relevant for my business
Do you think cross-border transaction costs are too high among Western Balkan economies?
Albania	38	33	29
Bosnia and Herzegovina	67	15	19
Kosovo*	49	47	4
North Macedonia	44	23	32
Montenegro	46	18	36
Serbia	34	18	48
Western Balkans	43	22	34

Pervasive Lack of Climate Change Awareness: A Red Alert

A low level of awareness of climate change persists amongst businesses in the region, with 70% of respondents not considering it a problem for their activity. 42% of businesses believe that the green transition would have a positive impact on their business, but 50% believe it will have no impact.

Economy	Very serious problem	Somewhat serious problem	Not too serious problem	Not a problem at all	DK/refuse
How serious problem is climate change for your business?
Albania	9	28	34	29	0
Bosnia and Herzegovina	4	19	53	23	1
Kosovo*	2	32	54	11	0
North Macedonia	8	21	32	38	0
Montenegro	4	12	25	57	3
Serbia	3	27	36	33	0
Western Balkans	5	25	39	31	1

Economy	I believe it will have a very negative impact	I believe it may have a negative impact	I don’t believe it will impact my business either positively or negatively	I believe it may have a positive impact	I believe it will have a very positive impact	DK / refuse
Do you believe that the green transition will have an impact on your business?
Albania	0	6	24	35	34	2
Bosnia and Herzegovina	0	12	29	33	9	16
Kosovo*	0	6	24	43	27	0
North Macedonia	4	6	52	29	7	1
Montenegro	3	7	45	17	12	18
Serbia	1	5	54	22	10	7
Western Balkans	1	7	43	28	14	7

Only 13% is predominantly using renewable energy and 37% did not take any steps towards reducing the environmental impact of their business.

Economy	Using predominantly renewable energy	Saving materials and minimising waste	Switching to greener supplies of materials	Selling residues and waste to another company	Recycling, by using materials or waste from within the company	Designing products that are easier to maintain, use, or repair	No steps have been taken	DK/refuse
What steps has your business taken over the last 12 months to reduce the environmental impact it makes?
Albania	23	61	47	20	21	29	14	1
Bosnia and Herzegovina	6	35	5	25	19	5	42	2
Kosovo*	16	55	26	28	11	1	22	0
North Macedonia	16	40	13	6	17	8	39	0
Montenegro	6	25	5	9	17	5	52	7
Serbia	13	27	14	22	30	10	41	1
Western Balkans	13	37	17	20	23	11	37	1

Regarding the adoption of greener practices, majority of respondents express belief in the efficacy of fiscal incentives for green economy (48%) and the enhancement of legislation pertaining to green economy and environmental standards (44%) as drivers for businesses.

Factors that can influence and improve implementation of good practices in their business activities are energy prices (52%), and energy and resource efficiency (38%). The main barriers to shifting towards circular economy are added costs (49%), and lack of skills and experience (30%). Lack of government subsidies (48%) was the second most cited barrier in 2022, right after added costs (64%), which kept the first position in 2023 as well. The lack of skills and experience was placed third in 2022 with 40% of respondents pointing to this issue.

Economy	Improving legislation regulating green economy and environmental standards	Fiscal incentives for green economy	Introduction of full price of waste management costs	Green public procurement	Education and awareness-raising programs to motivate sustainable consumption	DK/refuse
How can the Government incentivize greening the business sector?
Albania	64	71	48	40	39	1
Bosnia and Herzegovina	36	42	20	21	39	10
Kosovo*	63	83	54	24	3	0
North Macedonia	44	48	31	32	51	2
Montenegro	35	40	11	18	32	16
Serbia	39	39	39	29	28	13
Western Balkans	44	48	36	29	33	9

Economy	Training and development needs	Energy prices	Process or service innovation	Energy and resource efficiency	Customer pressure	Supply chain pressure	Legal compliance	DK / refuse
What factors listed below can improve the implementation of environmentally sustainable business practices in your company?
Albania	16	46	36	47	19	15	34	4
Bosnia and Herzegovina	27	45	23	24	15	17	26	11
Kosovo*	37	60	57	48	31	10	2	0
North Macedonia	27	63	22	43	11	15	28	5
Montenegro	22	36	15	17	12	19	25	15
Serbia	24	54	33	39	13	20	15	9
Western Balkans	25	52	31	38	15	17	21	8

Economy	Added costs	Lack of skills and experience	Lack of legal and regulatory framework	Lack of government subsidies	Lack of consumer demand	DK/refuse
What are the main barriers to shifting towards Circular Economy in your line of business?
Albania	74	21	25	45	35	9
Bosnia and Herzegovina	47	33	24	17	25	13
Kosovo*	49	70	69	30	9	0
North Macedonia	62	28	31	48	24	4
Montenegro	32	23	19	23	19	26
Serbia	40	25	24	25	15	19
Western Balkans	49	30	28	29	20	14

Corruption still a challenge, but digitalisation of public services could help

39% of businesses express some level of belief in the effectiveness of fight against corruption, which is a remarkable 17 points more than in 2022. On combating corruption, a significant majority of respondents (81%) in the WB economies agree that the process of digitalisation of public services would have either a fully or partially positive impact, indicating a widespread belief in the potential of digitalisation to mitigate corruption. This marks a growing trend of believing in digitalisation in coping with corruption, given that only last year 69% of respondents favoured digitalisation, thus marking 12 points improvement in 2023.

Economy	Totally disagree	Tend to disagree	Tend to agree	Totally agree	DK/refuse
To what extent do you agree or disagree with the following statement: “Fight against corruption in my economy is effective“.
Albania	30	51	18	1	1
Bosnia and Herzegovina	37	41	18	2	2
Kosovo*	4	18	64	14	0
North Macedonia	65	17	12	2	2
Montenegro	23	28	25	16	10
Serbia	8	31	41	9	10
Western Balkans	23	33	32	7	6

Economy	To a great extent	To a marginal extent	It will have no impact	DK/refuse
To what extent do you believe the digitalization of public services would have appositive impact in preventing corruptive practices?
Albania	35	57	7	1
Bosnia and Herzegovina	31	46	20	3
Kosovo*	33	60	7	0
North Macedonia	25	44	27	3
Montenegro	48	32	14	8
Serbia	44	36	16	3
Western Balkans	38	43	16	3

	Very poor	Poor	Neutral	Adequate	Exeptional	DK/refuse
How would you rate the following entities in reporting and processing corruption cases, or providing support in fight against corruption in your economy
CSOs	17	16	38	16	4	10
Media	11	21	35	22	7	4
Police	8	19	39	22	7	6
Tax offices	13	16	36	19	9	6
Customs	15	16	35	16	8	10
Other government agencies (i.e. supreme audit institutions, health-safety inspections)	13	19	36	18	7	9
Prosecutors‘ office	15	19	30	17	8	10
Courts	16	18	32	16	8	10
Parliaments	18	18	31	15	6	12
Government(s) at all levels	18	20	34	13	7	9

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo declaration of independence