Economy of Kosovo

Kosovo (a semi-recognized country), is one of the poorest countries in Europe, with Kosovo having a per capita income estimated at 1500 euro (2006). [ [http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/KOSOVOEXTN/0,,contentMDK:20629286~menuPK:297777~pagePK:1497618~piPK:217854~theSitePK:297770,00.html World Bank: Kosovo Brief 2006] ] Despite substantial development subsidies Kosovo was the poorest province of the former Yugoslavia. [Elizabeth Pond: "Why Turbulent Kosovo has Marble Sidewalks but Troubled Industries". Christian Science Monitor, 15 December 1981.] Over the course of the 1990s, poor economic policies, international sanctions, weak access to external trade and finance, and ethnic conflict severely damaged the already weak economy. [ [http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/KOSOVOEXTN/0,,menuPK:297775~pagePK:141159~piPK:141110~theSitePK:297770,00.html World Bank Kosovo Website] ]

Kosovo's economy remains weak. After increases in 2000 and 2001, growth in GDP was negative in 2002 and 2003 and is expected to be around 3 percent 2004–2005, with domestic sources of growth unable to compensate for the declining foreign assistance. Inflation is low, while the budget posted a deficit for the first time in 2004. Kosovo has high external deficits. In 2004, the deficit of the balance of goods and services was close to 70 percent of GDP. Remittances from persons living abroad account for an estimated 13 percent of GDP, and foreign assistance for around 34 percent of GDP.http://ec.europa.eu/economy_finance/publications/enlargement_papers/2005/elp26en.pdf]

Most economic development since 1999 has taken place in the trade, retail and construction sectors. The private sector that has emerged since 1999 is mainly small-scale. The industrial sector remains weak and the electric power supply remains unreliable, acting as a key constraint. Unemployment remains pervasive, at around 40-50% of the labour force. [ [http://www.eciks.org/english/lajme.php?action=total_news&main_id=386 ECIKS - News and analysis about Kosovo Economy in English ] ]

UNMIK introduced an external trade regime and customs administration on September 3, 1999 when it set customs border controls in Kosovo. All goods imported in Kosovo face a flat 10% customs duty fee. [http://www.buyusa.gov/kosovo/en/doingbusinessinkosovo.html Doing Business in Kosovo - U.S. Commercial Service Kosovo (UN Administered) ] ] These taxes are collected from all Tax Collection Points installed at the borders of Kosovo, including those between Kosovo and Serbia. [http://www.seerecon.org/kosovo/documents/wb_econ_report/wb-kosovo-econreport-2-2.pdf] UNMIK and Kosovo institutions have signed Free Trade Agreements with Croatia, [ [http://www.b92.net/eng/news/globe-article.php?yyyy=2006&mm=10&dd=02&nav_category=123&nav_id=37090 Croatia, Kosovo sign Interim Free Trade Agreement] , B92, 2 October 2006] Bosnia and Herzegovina, [ [http://www.euinkosovo.org/upload_press/4.06%20-%20UNMIK%20and%20Bosnia%20and%20Herzegovina%20Initial%20Free%20Trade%20Agreement%2017.2.06.pdf "UNMIK and Bosnia and Herzegovina Initial Free Trade Agreement". UNMIK Press Release, 17 February 2006.] ] Albania [ [http://www.kosovo-eicc.org/oek/index.php?page_id=64 Oda Eknomike e Kosovës/Kosova Chambre of Commerce - Vision.To CMS V1.7 Powered by WWW.VISION.TO ] ] and Republic of Macedonia.

The Republic of Macedonia is Kosovo's largest import and export market (averaging €220 million and €9 million respectively), followed by Serbia (€111 million and €5 million), Germany and Turkey. [http://siteresources.worldbank.org/INTKOSOVO/147270-1121700806276/20953280/Kosovo_Economic_Briefing_april.pdf]

The euro is the main currency of Kosovo and used by UNMIK and the government bodies. [ [http://www.euinkosovo.org/uk/invest/invest.php Invest in Kosovo – EU Pillar top priorities: privatisation process and focus on priority economic reforms ] ] Initially, Kosovo adopted the German mark in 1999 to replace the Serbian Dinar, [ [http://news.bbc.co.uk/2/hi/business/437844.stm BBC News, Kosovo adopts Deutschmark] ] and consequently switched to the euro when the German mark was replaced by it. Although, the Serbian Dinar is still used in the Serbian populated parts.

The economy has been seriously weakened by Kosovo's still-unresolved international status, which has made it difficult to attract investment and loans. [" [http://news.bbc.co.uk/1/hi/business/4509781.stm Brussels offers first Kosovo loan] ", BBC News Online, 3 May 2005] The province's economic weakness has produced a thriving black economy in which smuggled petrol, cigarettes and cement are major commodities. The prevalence of official corruption and the pervasive influence of organised crime gangs has caused serious concern internationally. The United Nations has made the fight against corruption and organised crime a high priority, pledging a "zero tolerance" approach. [" [http://www.kosovo.undp.org/Projects/TIK/tik.asp Transparency Initiative for Kosovo (TIK)", UN Development Programme in Kosovo] ]

Car manufacturer Porche has opened a branch in Kosovo. Besides Porsche automobiles, other brands such as Volkswagen, Audi and Seat will be sold in Kosovo by the same distributor, due to recognition by Austria. [ [http://www.newkosovareport.com/20080623988/Business-and-Economy/Porsche-opens-retail-branch-in-Kosovo.html "Porsche opens retail branch in Kosovo"] "newkosovareport.com" 24 June Link accessed 26/06/08]

Trade

Initial figures for Kosovo’s external trade of goods show a net trade deficit 143.1 million € for December 2007 compared with deficit of 133.0 million € for the same period 2006.Export and Import for period December 2007 were worth respectively 13.7 million € and156.8 million €. There is a (155,8%) increase for exports and (13,3%) for imports compared tothe same period 2006.

Kosovo exports in December 2007: Sweden (23,9%), Belgium (17,6%), Albania (8,1%),Serbia (8,1%), Macedonia (6,2%), Bulgaria (4,7%) etc.According to the data for the period Decembar 2007 more import we have from: Macedonia(15,2%), Serbia (12,8%), Germany (10,6%), China (6,8%), Turkey (5,5%) etc.EU countries have imported (36,5%) and exported (60,1%).http://www.ks-gov.net/ESK/

The Kosovar Consolidate Budget is over 1 billion euros. http://www.eciks.org/english/invest.php?action=total_invest&main_id=13

References

ee also

*Central Bank of Kosovo
*History of Kosovo
*List of banks in Kosovo