The European Bank for Reconstruction and Development (EBRD) estimated Thursday that the damage from record floods in Serbia and Bosnia could cost some 3 billion euros ($4 billion).
"No official estimates as to the cost of this natural disaster are available as yet. However, some very rough preliminary estimates put the damage at around €1.5-2 billion in Serbia, and about €1.3 billion in Bosnia and Herzegovina," the EBRD said in a statement.
Particularly badly affected is the agriculture sector as most of the arable land in flooded areas has been destroyed and the damage in both countries could be hundreds of millions euros, the EBRD said. The sector makes up 10 percent of Serbia's gross domestic product (GDP) and six percent of Bosnia's.
Damage to the energy sector is also likely to be costly, in particularly in Serbia where the largest mining complex Kolubara, crucial for the country's energy system, has been flooded.
In addition, roads, railways, water supply and energy transmission infrastructure have also been badly hit, which could affect businesses across the region, the EBRD said.
"The floods could also have a sizeable macro-economic impact on Serbia and Bosnia, affecting short-term growth and inflation as well as their policy priorities and the budget for this year," the EBRD said.
Current EBRD growth forecasts for 2014 are 1.8 percent for Bosnia and 1.0 percent for Serbia and they may well need to be revised further downwards, the EBRD said.
However, both countries could count on significant international aid, the bank said, pointing out that "the EBRD has already described responding to the crisis as one of its major priorities and aims to reallocate existing funding in the region to help finance food relief".
The EBRD said it would place a priority on the rehabilitation of damaged roads and water systems as well as power stations and transmission and distribution networks.
Earlier this week the EU allocated 65 million euros to Serbia and Bosnia to help them cope with the consequences of the worst floods in a century that, along with Croatia, affected around two million people, claimed 77 lives and forced tens of thousands to leave homes.