The war in Ukraine is testing again the resilience of the Western Balkan economies as they recover from the pandemic, European Investment Bank (EIB) Chief Economist Debora Revoltella said at Tuesday’s presentation of an enterprise survey titled Are companies in the Western Balkans Prepared for Another Crisis?

“New risks and heightened uncertainty are putting cross-border flows and trade under pressure. This matters as our analysis shows that firms’ resilience and innovation capacity are linked to their participation in global value chains and trade,” Revoltella told the Western Balkans Investment Framework Strategic Board in Rome.

“In this phase of potential deglobalisation trends, the Western Balkans should build on its competitive advantage of strong ties with the European Union and reinforce it further, as a springboard for faster development,” she said.

To date, companies in the Western Balkans have come through the pandemic “better than initially feared,” according to a report titled Business Resilience in the Pandemic and Beyond, jointly published by the EIB, the EBRD and the IMF, covering a broader region of Eastern Europe and Central Asia.

Western Balkan firms “lost 29 pct of turnover and shed 9 pct of their labour force, with the pandemic hitting contact-intensive services and smaller and medium-sized businesses especially hard,” an EIB statement said.

“Nevertheless, massive policy support helped to prevent large-scale bankruptcies, with only 3 pct of firms in the region filing for insolvency or closing permanently.

The report shows that firms that were integrated into global value chains, those that had been more innovative in the past, those that were more digitalised and those with better quality management adapted better during the pandemic.

They expanded their online presence, switched to remote work, adjusted production or took advantage of the available policy support more effectively.

Government programmes played a stabilising role by mitigating the stress of vulnerable firms, such as smaller businesses, standalone firms and those lacking overdraft facilities,” it also said.