Economic Monitor Kosovo
With a real GDP growth rate of merely 2.7% in 2022, Kosovo’s economy is experiencing only moderate economic growth. In particular, a massive increase in imports of goods – following surging global prices for key products – as well as weak consumption on the back of inflation and declining public investment had a negative impact on economic performance. These negative influences were at least partially absorbed by remittances and tourism activities of the Kosovar diaspora. For 2023, the outlook is slightly more favourable, with a recovery predicted for both consumption and investment following an expected ease in global commodity prices.
WA 4 | March 2023
Macroeconomic Analyses and Forecasting
Overview
- Moderate economic growth in 2022; GDP increased by only 2.7%, in the context of flat consumption and decreasing investment
- Economic growth expected to be slightly higher in 2023 (3.5%), mainly driven by consumption and investment
- Surge in inflation (2022: 11.6%) on the back of high global commodity prices, expected to ease in 2023
- Very significant current account deficit in 2022 (>10% of GDP), due to high import prices for food and energy
- Strong (diaspora) tourism and remittances somewhat contained the shock on the import side
- Public revenues and expenditures balanced in 2022, though at the expense of low public investment activities, which bears economic risks in the mid-term
Special issues
- Business climate. Reform space for improving the business climate despite positive perceptions
- Electricity imports. Regulated consumer prices lead to sizeable economic and quasi-fiscal burden
- National Energy and Climate Plan. Shaping Kosovo‘s future climate policy
