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.
Nominal GDP of USD 11.1 billion in 2024.
GDP per capita of USD 6,391 compared to the global average of USD 10,589.
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.
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 hit 4.1% for the second quarter running in Q4, below the pre-pandemic 10-year average. Turning to Q1 2025, available data sends mixed signals. Remittance inflows gathered steam and real wages rose, boding well for private spending. That said, goods exports swung into contraction. Turning to Q2, this trend reversed in April, when remittance inflows shrank and merchandise exports rose for the first time this year. In other news, in May, the EU announced that it had started easing sanctions on Kosovo. The country is estimated to have lost around EUR 600 million in halted funding since 2023, when heightened tensions with Serbia prompted the EU to impose sanctions. Meanwhile, the government is yet to form a new cabinet after February’s parliamentary elections. Protracted legislative paralysis is set to hamper EU funds absorption and reforms.Kosovo Economic Forecasts
Projections out to 2034.41 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 41 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.