Economic Convergence Scoreboard for the Western Balkans 2026

Annex A. Economy profiles

This annex presents each Western Balkan economy’s overall convergence across 43 indicators, along with its rankings (relative to other Western Balkan economies) in the six assessed clusters.

In the Infrastructure and Connectivity, Skills, Business Environment, Digital Transformation and Greening clusters, scores measure performance against the EU average, set at 100. In the Macro-financial Stability cluster, scores measure compliance with the relevant EU reference values, where 100 indicates compliance with the applicable criterion. For more details on the score calculation and indicator selection, please refer to (Annex B) Methodology.

Albania

Key highlights

Albania ranks fourth among Western Balkan economies in overall convergence with the EU. The economy leads the region in the Greening cluster and has recorded its largest gains in the Infrastructure and Connectivity, Business Environment and Digital Transformation clusters (Figure A A.1).

• Infrastructure and Connectivity is Albania's lowest-ranked cluster, ranking last in the region. Transport infrastructure remains underdeveloped, with marginal rail freight activity, and broadband speed is the lowest in the region. The expansion of 4G coverage and the fall in electricity costs stand as the cluster's main positive developments.

• Albania ranks third in the region in the Skills cluster, with limited convergence towards the EU. Labour market participation is a strength, with the region's highest employment rate and narrowest gender gap in labour force participation. These favourable outcomes contrast with weaknesses in skills development and utilisation: Albania records the region's lowest labour productivity and lowest participation in lifelong learning, while the youth NEET rate remains elevated.

• The Business Environment cluster has recorded Albania's strongest progress since 2014-2016, although the economy still ranks second-last in the region. Gains in trade and business creation, alongside FDI inflows into tradable sectors, have supported this progress. Nonetheless, private investment has weakened over time, recording the region's largest decline in relative performance, while corruption and informal employment continue to undermine the level playing field.

• Albania has converged rapidly in the Digital Transformation cluster, although it ranks second-last in the region. Progress has been particularly strong in business digitalisation, including the uptake of AI technologies, where Albania ranks first. Internet use is also widespread, with Albania recording the region's highest performance in engagement with digital public services. Nonetheless, the population's digital skills, ICT service exports and secure internet server density remain challenging areas.

• Albania ranks first in the region in the Greening cluster, underpinned by low carbon intensity, a largely renewable electricity system and high energy productivity. Nonetheless, its relative advantage has narrowed over time, particularly regarding installed renewable capacity, while landfill reliance and air-pollution outcomes also remain weak compared with the EU.

• Albania ranks fourth in the region in the Macro-financial Stability cluster, with most indicators improving. This performance is supported by low inflation and a sound fiscal position, alongside an improving current account balance. Nonetheless, long-term government interest rates remain the region's highest, despite considerable improvement, while exchange-rate stability has eased amid the lek's recent appreciation.

Figure A A.1. Albania’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable with the other clusters.

Bosnia and Herzegovina

Key highlights

Bosnia and Herzegovina ranks fifth among Western Balkan economies in overall convergence with the EU. The economy leads the region in the Macro-financial Stability cluster, the only Western Balkan economy to achieve full compliance with the relevant EU reference values and has recorded its largest gains in the Business Environment cluster (Figure A A.2).

• Infrastructure and Connectivity is Bosnia and Herzegovina's second fastest area of convergence. Progress has been particularly strong in digital connectivity, supported by the widespread deployment of 4G networks. Energy infrastructure is a relative strength for Bosnia and Herzegovina, with the economy recording the region's lowest power losses.

• Performance in the Skills cluster has remained unchanged, with Bosnia and Herzegovina continuing to face difficulties in translating its skills base into stronger labour market outcomes. Employment has improved, although progress in closing the gender gap in labour force participation has been slower than in the EU. The economy maintains a highly educated workforce and has recorded the region's highest convergence in reducing the youth NEET rate. Nonetheless, limited participation in lifelong learning and low patent activity continue to constrain skills development and its contribution to innovation.

• Business Environment is Bosnia and Herzegovina's fastest area of convergence towards the EU, although the economy still ranks last in the region. This progress has been supported by gains in private investment and domestic credit for the private sector. Nonetheless, ensuring a level playing field remains a challenge, with high levels of informality and persistent weaknesses in addressing corruption.

• Digital Transformation is among Bosnia and Herzegovina's lowest-performing clusters, with the economy ranking last among its regional peers. Internet use is widespread, but limited digital proficiency among citizens, along with the region's second-lowest density of secure internet servers, constrains the potential to leverage digital technologies in interactions with public services and businesses.

• Greening is Bosnia and Herzegovina's lowest-performing cluster, with performance diverging from the EU across most indicators. Decarbonisation has progressed more slowly than in the EU, and the economy records the region's highest CO² emissions intensity. Resource use also remains a weakness, with water productivity among the region's lowest and only modest progress recorded in municipal waste management.

• Bosnia and Herzegovina is the region's top performer in the Macro-financial Stability cluster. This performance reflects full compliance with the EU reference values across all five indicators: price stability, fiscal balance, exchange-rate stability, long-term interest rates, and current account balance.

Figure A A.2. Bosnia and Herzegovina’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable with the other clusters.

Kosovo

Key highlights

Kosovo remains the lowest-ranked Western Balkan economy in overall convergence with the EU, despite recording the region's fastest convergence. The economy has recorded its largest gains in the Business Environment cluster, while Greening remains its lowest-ranked cluster (Figure A A.3).

• Kosovo has made some progress in the Infrastructure and Connectivity cluster, although it ranks fifth in the region. This progress has been supported by competitive electricity costs, where Kosovo is the region's top performer. Nonetheless, gaps remain in transport infrastructure, with marginal rail freight activity, while broadband connectivity continues to lag behind the EU.

• Skills is Kosovo's second lowest-performing cluster, with the economy ranking last in the region. Educational attainment remains relatively strong, but this has yet to translate into stronger labour market outcomes. The economy's labour productivity has recorded the region's largest divergence from the EU, as has the youth NEET rate, while the employment rate is the region's lowest and the gender gap in the labour force is the region's highest. Patent application activity, the lowest in the region, reflects the gaps in the innovation landscape and limited capacity to translate research and innovation into commercially viable outputs.

• Business Environment has recorded Kosovo's highest gains, although the economy still ranks fourth in the region. This progress has been supported by improvements in access to finance, where Kosovo is the region's top performer in domestic credit to the private sector, bank non-performing loans, and private investment. Nonetheless, informality, the region's highest, together with persistent high perceptions of corruption, continues to weigh on the business environment.

• Kosovo ranks fourth in the Digital Transformation cluster, having recorded modest convergence towards the EU. This performance has been supported by improvements in digital skills and the region's highest level of internet use for online purchases. Nonetheless, the low prevalence of secure internet servers continues to constrain digital economy development, and adoption of advanced technologies such as AI remains limited.

• Kosovo is the region's lowest performer in the Greening cluster, with only limited convergence towards the EU. The highest gains have been recorded in installed renewable capacity, although the economy still ranks last in the region in this area. Nonetheless, resource use remains a major weakness, with Kosovo recording the region's highest share of municipal waste disposed of in landfills.

• Macro-financial Stability is a strong area of performance for Kosovo, as the economy ranks second in the region. Except for the current account balance, the other indicators, namely price stability, fiscal balance, exchange-rate stability, and long-term interest rates, all remain within the relevant EU reference values.

Figure A A.3. Kosovo’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable with the other clusters.

North Macedonia

Key highlights

North Macedonia ranks third among Western Balkan economies in overall convergence with the EU. The economy recorded its largest gains in the Business Environment cluster, while declining performance in Skills, Greening, and Macro-financial Stability weighed on overall convergence (Figure A A.4).

• The Infrastructure and Connectivity cluster’s performance has been supported by strong gains in digital infrastructure, where the economy stands among the region's top performers. Nonetheless, energy infrastructure remains a weakness, with a wide divergence from the EU and the region's highest electricity costs for non-household consumers. Challenges also persist in transport infrastructure, particularly in rail freight activity.

• Skills is the lowest-performing cluster, with performance diverging from the EU over time. Labour market and education outcomes remain mixed, with improvements in employment and educational performance offset by low lifelong learning participation and patent applications.

• Business Environment is the economy’s fastest area of convergence towards the EU. This progress has been supported by growing FDI inflows into tradable sectors, higher levels of private investment and the region's highest level of trade flows. Nonetheless, ensuring a level playing field remains a challenge, with high perceptions of corruption and continued high levels of informality, although estimated informal employment remains the region's lowest.

• Digital Transformation has recorded modest convergence towards the EU. Business digitalisation remains uneven, as website adoption is the lowest in the region and AI uptake records the region's largest divergence. Nonetheless, digital uptake among individuals has improved, with online purchases recording the region's highest convergence. The ICT sector also shows positive developments, with the sector’s exports recording the region's fastest convergence towards the EU.

• North Macedonia has diverged sharply from the EU in the Greening cluster, with the relative performance of all indicators declining. Progress towards decarbonisation has been particularly slow, and environmental quality remains a concern, with North Macedonia recording the region's highest level of premature deaths from air pollution.

• Macro-financial Stability is the economy’s lowest-ranked cluster, driven by weaker outcomes in price stability, government balance and long-term interest rates. Nonetheless, the current account balance remains within the EU reference values, and exchange-rate stability against the euro has been maintained.

Figure A A.4. North Macedonia’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable to the other clusters.

Montenegro

Key highlights

Montenegro is the region's top-ranked economy in overall convergence with the EU. The economy leads the region in the Business Environment cluster, while performance in Greening has recorded the region’s steepest divergence (Figure A A.5).

• Montenegro ranks second in the Infrastructure and Connectivity cluster. Convergence is observed across almost all indicators, with particularly strong progress in digital infrastructure and electricity costs. Power losses are the sole indicator showing divergence, although Montenegro still ranks second in the region on this front.

• Despite slight divergence from the EU over time, Montenegro ranks second in the Skills cluster. The economy benefits from a highly educated workforce, leading the region in this respect. Employment outcomes have improved, but challenges persist in fully tapping into the skills base, with limited lifelong learning opportunities and a high youth NEET rate. Nonetheless, patent activity has strengthened, ranking first in the region, although it remains low.

• Business Environment is Montenegro's highest-ranked cluster, with the economy leading the region. This performance is supported by dynamic business creation, where Montenegro records the region's highest performance, and a strong capacity to attract FDI in tradable sectors. Nonetheless, difficulties persist in enhancing access to finance and investment, with Montenegro recording the region's lowest level of private investment.

• Montenegro ranks second in the Digital Transformation cluster. The population has widespread internet use and is the most digitally skilled in the region, but interactions with public authorities and online purchases remain well below the EU average.

• Despite recording the region's steepest divergence over the last decade, Montenegro ranks second in the Greening cluster. Resource use remains a key challenge, particularly in municipal waste management, where Montenegro ranks second-last. Still, the economy records the region's lowest level of premature death from air pollution, although the level remains well above the EU average.

• Montenegro ranks third in the region in the Macro-financial Stability cluster, supported by strong price stability and a balanced government budget, alongside exchange-rate stability, de facto ensured through its use of the euro. The current account deficit is the cluster's main weakness and remains well above the EU reference value.

Figure A A.5. Montenegro’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable with the other clusters.

Serbia

Key highlights

Serbia shows the region's second-highest overall convergence with the EU. The economy leads the region in three of the six policy clusters: Infrastructure and Connectivity, Skills and Digital Transformation. Nonetheless, Greening remains Serbia's most challenging policy area, with performance declining further over time (Figure A A.6).

• Serbia is the regional leader in Infrastructure and Connectivity. Digital connectivity is a key strength, supported by widespread 4G population coverage and comparatively strong broadband access. Transport and energy infrastructure also perform relatively well, although convergence gains in these areas have remained limited.

• Skills is the second cluster in which Serbia leads the region, supported by favourable education and labour market outcomes. The economy records the region's highest PISA mathematics score, while also leading its peers in lifelong learning and recording the lowest youth NEET rate. Nonetheless, these strengths have not yet translated into stronger labour productivity, and the convergence gap towards the EU has remained unchanged.

• Business Environment is the economy’s highest-performing cluster and has recorded the highest convergence towards the EU. This progress has been supported by Serbia's strong capacity to attract FDI in tradable sectors, where it leads the region and has recorded the region's highest convergence, as well as the region's largest reduction in non-performing loans. Nonetheless, challenges remain in ensuring a level playing field, particularly in addressing perceived corruption and informality.

• Rapid convergence has made Serbia the regional leader in the Digital Transformation cluster. This performance is supported by widespread online engagement, a strong ICT sector, and the region's second-highest level of website use. Nonetheless, digital skills have fallen further behind the EU, while secure internet infrastructure remains limited despite Serbia ranking first in the region on this indicator.

• Greening is the economy’s lowest-performing cluster, with overall performance declining further over time. Energy-related outcomes remain particularly weak, as Serbia records the region's second-lowest energy productivity alongside a sharp divergence in installed renewable power capacity. Performance in municipal waste management has also declined sharply, although Serbia remains the regional leader.

• Serbia has recorded convergence in the Macro-financial Stability cluster, although the economy still ranks last in the region. This progress has been driven by stronger performance in the government balance, lower long-term government interest rates, and an improved current account balance, while exchange-rate stability against the euro has been maintained. Nonetheless, price stability has weakened, and it remains outside the relevant EU reference values together with long-term government interest rates and the current account balance.

Figure A A.6. Serbia’s economic convergence by cluster and by indicator

Notes: The overall score is calculated as the average convergence score across all clusters, excluding Macro-financial Stability, whose score is not directly comparable with the other clusters.