Kosovo Economic Outlook
One of Europe’s youngest and fastest-growing economies:
Kosovo has one of the youngest populations in Europe and has posted strong economic growth since declaring independence in 2008. Growth has been driven by remittances, public spending, and a growing services sector, particularly in retail and IT. However, the economy remains highly informal and dependent on foreign aid.
Remittances and trade imbalances:Remittances from the large Kosovo diaspora contribute around 15% of GDP, providing a key source of foreign exchange. However, Kosovo runs a persistent trade deficit, relying heavily on imports while struggling to develop a competitive export sector. Agriculture, mining, and IT have potential for expansion but face investment and regulatory challenges.
Unemployment and structural weaknesses:Unemployment, particularly among youth, remains one of Kosovo’s biggest economic challenges. Many workers seek opportunities abroad due to limited job prospects at home. Additionally, weak rule of law and political tensions have deterred significant foreign investment, despite Kosovo’s strategic location in the Western Balkans.
Kosovo’s economic outlook:While Kosovo’s economy is expected to continue expanding, reducing unemployment and diversifying exports are critical for long-term stability. Improved governance, investment in education and infrastructure, and stronger regional integration will be key to unlocking the country’s economic potential. EU integration would provide additional momentum for reforms and investor confidence.
Kosovo's Macroeconomic Analysis:
Nominal GDP of USD 11.1 billion in 2024.
GDP per capita of USD 5,959 compared to the global average of USD 10,589.
Average real GDP growth of 4.2% over the last decade.
Sector Analysis
In 2022, services accounted for 46.0% of overall GDP, manufacturing 12.8%, other industrial activity 33.4%, and agriculture 7.8%. Looking at GDP by expenditure, private consumption accounted for 83.9% of GDP in 2023, government consumption 12.5%, fixed investment 34.2%, and net exports -30.6%.International trade
In 2021, manufactured products made up % of total merchandise exports, mineral fuels 4.0%, food 8.3%, ores and metals 21.0% and agricultural raw materials 11.7%, with other categories accounting for 55.0% of the total. In the same period, manufactured products made up % of total merchandise imports, mineral fuels 11.5%, food 17.7%, ores and metals 11.0% and agricultural raw materials 1.9%, with other goods accounting for 57.9% of the total. Total exports were worth USD 1 billion in 2024, while total imports were USD 6.40 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 4.3% in the decade to 2023. To read more about GDP growth in Kosovo, go to our dedicated page.
Fiscal policy
Kosovo's fiscal deficit averaged 2.5% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 25.1% in the decade to 2023. For more information on Kosovo's unemployment click here.
Inflation
Inflation averaged 2.5% in the decade to 2023. Go to our Kosovo inflation page for extra insight.
Monetary Policy
Kosovo's monetary policy rate ended 2024 at 5.87%, down from 9.29% a decade earlier. See our Kosovo monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the euro strengthened by 20% vs the U.S. dollar. For more info on the euro, click here.
Economic situation in Kosovo
Annual GDP growth fell to 3.1% in Q3 (Q2: +4.6% yoy) due to reduced government consumption and slower export growth. In contrast, both private spending and total investment accelerated from Q2. In other news, on 17 December, the EU said it is set to lift sanctions on Kosovo imposed in June 2023 over tensions in the Serb-majority north, paving the way for over EUR 200 million in frozen EU funding for infrastructure and energy, which should support investment. Renewed EU support could also give a political boost to Prime Minister Albin Kurti ahead of snap parliamentary elections on 28 December. Kurti’s LVV leads opinion polls with 50–53%, but whether it can form a government without a coalition partner remains uncertain. Overall, the election outcome will be pivotal for breaking the political stalemate that began in April and supporting EU accession progress.Kosovo Economic Forecasts
Projections out to 2035.41 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 61 expert analysts.
Want to get insight on the economic outlook for Kosovo in the coming years? FocusEconomics collects projections out to 2035 on 41 economic indicators for Kosovo from a panel of 61 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Kosovo economy. To download a sample report on the Kosovo's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.