Experts: Strong slowdown of economic growth expected this year

Forecast of the economic downturn to 3.9 percent of its 10.5 percent in 2021 has been influenced by increased risks with significant pressures from Russian military invasion in Ukraine. As a result of this war, foreign direct investments are expected to shrink and remit remittances from the Kosovo diaspora.

Meanwhile, in the Government of Kosovo, the Ministry of Economy, respectively, has failed to answer the World Bank's projections and how much their projections for economic development will be this year.

The executive director of the American Economic Ode in Kosovo, Arian Zeka, hopes that the World Bank and the International Monetary Fund projection have not been made based on this year's remittances and exiles' trend in Kosovo.

It expects this year's economic growth rate to be around 4 per cent.

This pre-priced or anticipated rate by international financial institutions of 3.9 per cent or 4 per cent, I believe it is real, reflects the country's potential and opportunities, as well as our economy to get such growth. I hope that the forecast was not made, based on the trends of last year, on the large arrival of the diaspora, since the relief of measures in the countries where they live would be to keep them from coming to the numbers we had, hopefully yes, but at the same time we should be based more on our real internal capacities, even on pillars that guarantee sustainable economic development and sustainable economic growth. The remittances, even the arrival of the diaspora despite the great importance and great impact they have on our economy, should not teach us to rely solely on them”, Zeka points out for Kosovas.

Even the professor at the Economic Faculty, Nagip Skarier, expects this year to have a strong slowdown in economic growth.

The recent global geostrategic events -- the war between Russia and Ukraine respectively -- have turned back all these predictions and claims. So the planned and projected economic growth, of course, will not remain in existing parameters and according to World Bank forecasts and analysis, and the International and Monetary Fund, as if the global economy and Kosovo's economy will experience a period of a cyclical decline in economic growth. Even in this context, however, positive growth figures remain, but not according to what was predicted. So all these international mechanisms predict economic growth for 2022 in Kosovo to remain around 3.9 per cent, and it is not what is predicted by the Government of Kosovo and other institutions that had predicted a two-digit increase, close to 10 per cent. In this context are external factors, but also internal factors that slow economic growth, but mainly recent developments between Russia and Ukraine have caused us to have a strong slowdown in economic growth”, Sk everyone says.

Further, university professor says of Kosova Prees, that the decline in economic activities will occur due to price hikes, reduced foreign investments, and the arrival of exiles is expected to be in smaller numbers this year.

The key “remains the international factor, but we have other factors that are in the institutional and business context that directly or indirectly influence Kosovo's economic growth. This, especially in the absence of absorption of foreign direct investments that Kosovo is unable to implement supporting and stimulating policies for foreign investors to invest their capital in Kosovo. Foreign investment is a key factor in economic growth... (05;50) A drop in diaspora income is expected in this context because even the economies of these countries are facing economic difficulties, so they too will hesitate to spend on consumption in this coming period, and especially on the constructionist, even in the food sector”, he says.

In the past seven years, Kosovo has had an economic growth at different rates. In 2015 economic growth was 5.9%, 5.6% in 2016, 4.8% in 2017, 3.4% in 2018, 4.8% in 2019, while due to pandemic in 2020, economic growth was minus -5.3%, and in 2021, the growth rate reached 10.5 percent.