Balkan Barometer

Balkan Barometer 2024 Business Opinion

Key Findings

The 2024 Balkan Barometer surveys were conducted in March and April 2024 in Albania, Bosnia and Herzegovina, Kosovo* , Montenegro, North Macedonia and Serbia. The Business Opinion survey presented 40 main questions to 1,200 business owners, managers, or executives.

The 10th edition of the Balkan Barometer arrives at a challenging period of fighting the inflationary pressures, energy crises, and political instability, labour force shortages and brain drain being the most significant. In addition, regulatory and administrative issues, political and social instability, access to finance, weak demand, and informal economy practices also pose substantial challenges. These issues have placed additional strain on both individuals and businesses. The Balkan Barometer 2024 aims to capture these emerging concerns and provide a comprehensive understanding of the multifaceted challenges.

Sharp rise of support to regional cooperation

The majority of Western Balkan business people consider regional cooperation good for their business, as 59% of them anticipate benefits from it, reflecting a broad recognition of mutual advantages, including potential advantages of enhanced collaboration, suggesting opportunities for fostering economic growth and stability across the Western Balkans. Such cooperation can lead to shared resources, knowledge exchange and economies of scale, attract investment, and enhance overall competitiveness and innovation. Only a very small minority of 2% foresee negative consequences.

In 2024, over half of businesses (57%) anticipate gains from being able to travel with ID cards only across the Western Balkan. While this marks just 1% increase from the previous year, it highlights steady and growing importance of the mobility agreements that the RCC, in collaboration with regional partners and WB economies, is working to advance. Along the same lines, nearly half of businesses (47%) reported saving on operational costs thanks to the roaming-free policy introduced in 2021, as part of the same work on the mobility agreements in the region. They also noted improved communication with regional partners, reflecting only a slight 3% decrease compared to 2023. These agreements are set to enhance regional connectivity, but also streamline business operations.

Economy	Good	Neither good nor bad	Bad	DK/refuse
Do you believe that the improved cooperation in Western Balkans would be good, neither good nor bad, or bad for your business?
Albania	61	36	1	3
Bosnia and Herzegovina	74	23	1	4
Kosovo*	75	19	0	7
Montenegro	42	43	2	13
North Macedonia	55	40	3	3
Serbia	46	46	5	4
Western Balkans	59	34	2	5

Enlargement Fatigue Reflects on Western Balkan Businesses

The enlargement fatigue reflects equally on Western Balkan citizens at large as does on the region’s businesses, though to a lesser extent. Even though the survey recorded a 7% drop of business people’s support to EU membership since the last year, with overwhelming majority of 64% it is still higher than 59% of the citizens at large.

Economy	Good	Neither good nor bad	Bad	DK/refuse
Do you believe that the membership in the EU would be good, neither good nor bad, or bad for your business?
Albania	80	14	5	2
Bosnia and Herzegovina	73	22	3	4
Kosovo*	79	13	0	8
Montenegro	58	32	1	10
North Macedonia	56	35	8	2
Serbia	38	44	16	3
Western Balkans	64	26	5	5

Over the past decade, more and more business people expressed conviction that joining the EU would be good for their business. In fact, this belief hit its highest point in 2023, with 71% of people feeling positive about it. Despite the drop of 7 percentage points since last year, it is still higher than before 2019, when it ranged from 53% to 57% between 2018 and 2015. At the same time, fewer people believe EU membership does not really make a difference or is bad for their business.

Economy	Good	Neither good nor bad	Bad	DK/refuse
Do you believe that the membership in the EU would be good, neither good nor bad, or bad for your business?
2015	56	34	8	2
2016	54	33	9	4
2017	57	32	7	4
2018	53	31	9	7
2019	64	28	6	2
2020	63	28	6	3
2021	66	28	4	2
2022	60	30	7	3
2023	71	23	5	1
2024	64	26	5	5

Optimism over Improvement of the General Economic Situation Wavering

With 31% of Western Balkan businesses believing the general economic situation in the region will be better, while 21% think it will worsen (compared to 2023, when it was 33% and 22% respectively), the optimism over improvement is wavering and is still below the pre-pandemic scores (43% and 12% respectively). These mixed expectations underscore the region's complex and volatile economic environment, shaped by local and global influences.

Economy	Improve	Remain the same	Worsen	DK/refuse
Do you think that the general economic situation will improve, remain the same or worsen in the next 12 months?
Albania	36	42	19	4
Bosnia and Herzegovina	30	50	17	3
Kosovo*	41	37	11	13
Montenegro	19	28	37	17
North Macedonia	24	44	26	7
Serbia	39	43	17	2
Western Balkans	31	41	21	7

Labour Force Shortage and Brain Drain Remain the Biggest Obstacles for Doing Business

The 2024 Survey results reveal that for businesses operating in the Western Balkan economies, the most prevalent obstacles to doing business are those related to the availability of workers, namely labour force shortages (average score recorded at 2.2) and brain drain (average score of 2.3). The second group of dominant obstacles (average score 2.5) are customs, tax rates and trade regulations, political or social instability, access to finance, weak demand, and informal economy and unfair competition. Discrimination based on ethnicity, gender, age and the like is identified as the smallest obstacle in all Western Balkan economies as it was the case last year too.

Economy	Mean Western Balkans
How the following different factors affect the growth of your business? (Scores on a scale of 1 to 4 where 1 means major obstacle, 2 moderate obstacle, 3 minor obstacle and 4 no obstacle)
Telecommunications, transportation and electricity, and investment in broadband	2,6
Customs, tax rates and trade regulations	2,5
instability	2,5
Business licensing and permits	2,7
Access to finance	2,5
Labour regulation	2,8
Brain drain/emigration	2,3
Discrimination based on ethnicity, gender, age, sexual orientation, or other	3,3
Negative image of [ECONOMY] or the Western Balkans region	2,9
Weak demand	2,5
Shortage of labour force	2,2
Shortage of land and physical spaces	3,0
Informal economy and unfair competition	2,5
Corruption	2,6
Crime	2,8

Prices, Taxes and Labour Force on Top of Priority List for Developing Business throughout the Region

The most crucial factors for developing business relations with other Western Balkan economies are prices (88%), taxes (87%), and labour force (86%). This underscores the importance of containing inflationary pressures and having a favourable tax system; thus reducing the financial burden on businesses, allowing them to invest more in growth and innovation. Furthermore, it highlights the critical need for skilled and affordable workforce to support business operations and growth across the region.

Transportation costs, with 83%, and removal of trade barriers, with 81%, also remain high on the priority list. This underscores the relevance of greater regional integration within the Western Balkans and with the EU, including through the reduction of trade barriers and related costs of doing business embedded into the Common Regional Market, a stepping stone for integration into the EU Single Market.

Economy	Important	Somewhat important	Not important	DK/refuse
What is the importance of the following aspects for developing business relations with other Western Balkan economies?
Removal of trade barriers	49	32	16	3
Transportation costs	56	27	14	3
Prices	64	24	9	3
Favourable tax system	59	28	10	4
Quality and cost of labour force	59	27	10	3
Business environment in general	49	33	14	4
Similar cultural environment	28	39	28	6

Western Balkan Businesses Still Reluctant to Recruit Within the Region?

Businesses were surveyed about their likelihood of hiring labour from other Western Balkan economies. The survey results reveal several underlying factors that influence these decisions. Only 23% of businesses in the region expressed likelihood of seeking labour from other Western Balkan economies. This indicates a general reluctance to hire regionally, which could be attributed to administrative hurdles such as working permits, diploma recognition, portability of social rights, taxing policies, etc. The survey also reveals that the top obstacle for doing business is a lack of skilled labour force, pointing out the necessity to work on policies that enhance labour mobility within the region. To this end, mobility agreements signed within the context of Berlin Process for several professions (doctors, dentists and architects and more) that yet need to become a usual practice in the forthcoming period provide a good opportunity for the mobility of professionals by facilitating the procedures for recognition of diplomas and professional qualifications.

Economy	Very likely	Rather likely	Rather unlikely	Very unlikely	DK/refuse
How likely is your business to seek labour force from other Western Balkan economies?
Albania	6	19	39	32	4
Bosnia and Herzegovina	3	8	50	34	6
Kosovo*	9	44	22	14	12
Montenegro	5	15	21	48	12
North Macedonia	5	14	20	60	3
Serbia	3	11	25	59	3
Western Balkans	5	18	29	41	6

Businesses’ Opinion on Anti-Corruption Efforts in Western Balkans is Shifting

In 2024, 50% of respondents believe the fight against corruption is effective, which is an 11 percentage point improvement relative to the last year. This shift suggests some progress, but with 42% still disagreeing, challenges remain. Overall, perceptions are improving, but disparities across economies indicate the need for tailored and robust anti-corruption strategies.

Economy	Totally agree	Tend to agree	Tend to disagree	Totally disagree	DK/refuse
Fight against corruption is effective in my economy.
Albania	44	36	7	12	3
Bosnia and Herzegovina	15	20	25	36	5
Kosovo*	33	42	9	7	10
North Macedonia	15	27	22	12	26
Montenegro	4	31	51	15	0
Serbia	7	30	32	29	4
Western Balkans	19	31	24	18	8

* 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