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.
Nominal GDP of USD 10.5 billion in 2023.
GDP per capita of USD 5,959 compared to the global average of USD 10,589.
GDP per capita of USD 6,391 compared to the global average of USD 10,589.
Average real GDP growth of 4.2% over the last decade.
Average real GDP growth of 4.3% over the last decade.
Sector Analysis
In 2022, services accounted for 46% of overall GDP, manufacturing 13%, other industrial activity 33%, and agriculture 8%. Looking at GDP by expenditure, private consumption accounted for 84% of GDP in 2023, government consumption 13%, fixed investment 34%, and net exports -31%.International trade
In 2021, manufactured products made up % of total merchandise exports, mineral fuels 4%, food 8%, ores and metals 21% and agricultural raw materials 12%, with other categories accounting for 55% of the total. In the same period, manufactured products made up % of total merchandise imports, mineral fuels 11%, food 18%, ores and metals 11% and agricultural raw materials 2%, with other goods accounting for 58% of the total. Total exports were worth USD 1 billion in 2024, while total imports were USD 6 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
Year-on-year economic growth came in at 4.1% in Q4, matching Q3’s outturn but remaining slightly below the long-run trend. Private consumption rose at a faster clip, aided by healthier remittances inflows and lower inflation. Moreover, growth in both total investment and exports of goods and services accelerated. On the flip side, public spending swung into contraction. Shifting to Q1 2025, the data at hand suggests that the economy is losing some steam. Merchandise exports declined in January–February after rising in Q4, and growth in remittances inflows cooled over the same two-month period. In other news, in late March, the country reached a staff-level agreement with the IMF for the disbursement of around EUR 25 million, the combined final tranche of two funding programs. The Fund encouraged Kosovo to continue implementing prudent fiscal policies going forward.Kosovo Economic Forecasts
Projections out to 2034.42 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 8 expert analysts.
Want to get insight on the economic outlook for Kosovo in the coming years? FocusEconomics collects projections out to 2034 on 42 economic indicators for Kosovo from a panel of 8 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.