Deepening the economic integration between the six Western Balkan countries and the European Union (EU) could help add 8-15% to the region's GDP per capita over the long run, roughly one-quarter to one-half of the estimated gains from full EU membership, said IMF resident representative for Serbia, Lev Ratnovski.

In a working paper published by the IMF last week, Ratnovski identified three broad areas for deepening the economic integration between the EU and Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia even before accession - goods market, logistics, and services.

When it comes to the goods market, the near-complete elimination of tariffs under the Stabilisation and Association Agreements between the Western Balkan countries and the EU provides a strong basis for deeper market integration. Reducing the remaining non-tariff barriers for industrial goods, including conformity assessment, rules-of-origin compliance, and customs procedures, would lower trade costs and boost the participation of Western Balkan firms in European value chains, Ratnovski argued.

Deeper logistics integration hinges on resolving border delays, facilitating truck driver mobility under the EU's Entry/Exit System (EES), and transport market integration, while services market integration remains constrained by regulatory barriers, restrictions on cross-border provision, and non-recognition of professional and digital credentials.

Ratnovski said that lower barriers to EU-Western Balkans trade would substantially increase the Western Balkans' exports.

The report cautions that export growth should not be translated mechanically into GDP gains because imports of intermediate goods would also increase. However, deeper integration into European production chains could raise productivity through greater specialization, investment, technology transfers, competition, and knowledge sharing.

The analysis estimates that deeper EU integration could increase the Western Balkans' participation in global value chains by 6-10 percentage points, potentially raising GDP per capita by 7-12% over the long term.

That would still be below the estimated 30-35% gain in GDP per capita associated with full EU membership, with the remaining benefits linked to institutional convergence, labour mobility, EU funding and full access to the single market, Ratnovski noted.