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.

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.

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%.

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

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.

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.

Have you used any of the following sources of capital over the past 12 months?

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
Western Balkans 69 38 5 5 11 5 2 5
Albania 97 36 5 1 0 7 0 0
Bosnia and
48 47 8 3 16 4 5 4
Kosovo* 61 65 5 5 13 13 4 2
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.

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.

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.

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

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.

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.

* 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