BERZH: The economy will grow by 4% in 2021, the cause of pandemic reduced 5%

The 5 per cent drop in the economy for this year and its 4 per cent growth for next year, thus envisions the European Bank for Reconstruction and Development (BERZH) in its annual Kosovo publication.

BELZH in “reportRegional economic prospects: COVID-19 ʹ early assessments of damage, uncertain prospects“, says the economic slowdown came largely due to the decline in investments.

After a 5 per cent domestic production contraction in 2020, a 4 per cent return is expected in 2021, with domestic demand continuing to be the main driver of growth, the report says.

According to the EBRD, with the beginning of the pandemic, GDP growth rate slowed.

With the beginning of the COVID-19 pandemic, Kosovo's growth rate of domestic production in the first quarter of 2020 slowed to 1.3 percent from 4.2 percent in 2019. The slowdown was largely due to the decline in investments, below the rate of 9 percent year-on-year, and construction, below 12 percent. The exports of services, which mainly relate to the diaspora and their visits to the country in the first half of 2020, registered a 35 per cent year-on-year drop of”, the BERZH says.

In the part of the report for Kosovo, the European banking institution says goods exports for this period have performed well.

<x0). Similarly, the influx of remittances remained strong, with an increase of 10 percent year-on-year in the first seven months of 2020”, says the report.

Likewise, B. ERZH says unemployment in the first quarter has dropped, but that it may still have increased from that period.

The unemployment storm dropped slightly in the first quarter of 2020 to 25 percent, but since then it may have grown. In April 2020, the government approved an Emergency Pack supporting employment, municipalities and individuals. In June, the new government approved the Economic Regeneration Pack covering 2020-23 and intended to facilitate access to finance, lower tax burdens, support employment, agriculture and public enterprises”, the EBRD reports.

Finally, the European Bank for Reconstruction and Development writes that further risks are related to continued weaknesses in the area of public investment management and slow economic recovery.

The risks for projection are in decline because the pandemic can intensify again. Further risks are related to continued weaknesses in the area of public investment management and slower recovery than predicted at key trade partners in the European Union”, the BELZH concludes.

According to the report, from the Western Balkans, Albania and Montenegro are expected to have the biggest economic downturn with 9 percent. Serbia is expected to suffer the crisis less, with a contraction of 3.5 per cent, northern Macedonia and Bosnia and Herzegovina will see a 5 per cent decline.

We remember that in May, the EBRD had predicted that for the current year, the economic downturn will be 5 percent, while its return to next year will be 7.5 percent.