The European Bank for Reconstruction and Development (EBRD) has increased its 2011 economic growth forecasts for Southeastern Europe even though the region is still predicted to fair worse than other regions.

Apart from Bosnia-Hercegovina, for which EBRD's growth forecast for 2011 remained at 2.2 percent, the six other southeastern European countries - Albania, Bulgaria, Macedonia, Montenegro, Romania and Serbia - were upgraded from the bank's October 2010 forecast.

In its latest quarterly economic report on the region the London-based EBRD expects that the Bulgarian economy will grow by 2.6% in 2011, up from a 2.4% projection three months ago. This is 1% smaller than the 3.6% growth forecast by the Bulgarian government.

The biggest increase is for Macedonia, as the EBRD said the former Yugoslav republic's economy was likely to grow 3.2% in 2011, up from the 2.3% percent projected earlier.

Romania's economy is said to grow by 1.1%, up from the 0.9% forecast, and Serbia's – by 3%, up from 2.9%.

"Economic prospects have improved slightly in recent months in the EU members, Bulgaria and Romania. In the former, distinct signs of a turnaround have emerged, including booming export growth, a good tourism season and prospects of a strong agricultural performance, all of which help to compensate for continued weaknesses in other key industries and in consumer demand more generally. In Romania, the government has managed to remain on course with the IMF programme by implementing harsh austerity measures that will help to keep the fiscal accounts under control. However, the Romanian economy declined again in 2010, by an estimated 2 per cent, and any recovery this year is likely to be modest," the EBRD says.

The region of the Balkans as a whole is expected to see an average economic growth of 1.9% in 2011, an increase from the 1.6% forecast from October.

Other regions in Eastern Europe will do much better economically, according to the EBRD: in 2011, the Central Europe and the Baltics are projected to grow by an average of 3.2%, the Eastern Europe and the Caucasus – by 4%, Central Asia – by 6.7%, Russia – by 4.6%, and Turkey – by 5%.

The EBRD predicts an average economic growth of all "transition countries" of 4.2%.

"The economic recovery that began in most parts of emerging Europe last year is continuing in 2011 but facing increased downside risks... Stronger than anticipated growth in the core euro zone, fiscal and monetary stimuli in the U.S., and rising commodity prices are likely to boost growth across the region in an increasingly private sector-led recovery... Risks could emerge if loose monetary policies fuel persistently higher inflation in advanced countries, leading in turn to an earlier than anticipated monetary tightening by major central banks," the development bank said in a statement.