Global Financial Crisis and Its Impact on Balkans

The aim of writing this paper is to reveal that the implication of the crisis to the western Balkans has been not of a sort of financial crisis, but an economic turbulence which has occurred as a result of lack of demand in the world markets to the western Balkan products and falling sources of finance. Expansionary fiscal policies on top of external trade deficits growing at record levels, calls into question the ability of the western Balkan economies to finance the needs, that in turn increases their vulnerability and that may lead to a possible financial crisis in future if the global financial crisis continues to sustain until 2010. What is expected to ease the conditions is the seasonally strong increase in construction, food exports and private transfers during the spring and summer seasons, expected to close the gaps that are being established through growing external trade deficits. Increase in construction business, growing food exports and raising remittances may offset vulnerabilities of the economies and may limit further economic and financial crisis in the region