If there is economic growth, why aren't citizens feeling it?

An economic growth at this level would have to offer ease in raising living standards. But, however, it is not expected to have a major impact on improving the well-being of citizens, assessing economic connoisseurs.

Why? This increase is insufficient, said economics professor at Pristina University, Berim Ramosaj.

In view of the basis of this growth, which is relatively low, it is not enough for ambitious growth, either income or other macroeconomic indicators, in terms of large budgetary increases or even increased prosperity, wages or social categories, whether it's an economic”, he explained.

The chairman of the American Economic Ode in Kosovo similarly said. Arian Zeka said that despite a 4 per cent increase, it would have to affect the rate of living standards lightly, the problem remains.

According to the Kosovo Statistics Agency, the inflation rate in 2022 was 11.6 per cent. She landed at 4.9 in 2023, and fell even more this year. In August, inflation was at 1.4 percent below the average of the European Union and the Eurozone.

Kosovo Finance Minister Hekuran Murati said in late September that economic growth and the decline in inflation are indications that “businesses and the country's economy are returning to the fastest growing trajector, where we even started after the pandemic”.

The Need for Doubtful Growth

However, economic growth, according to Zeka and Ramosj, is based mainly on consumption. The high level of consumption, experts estimate, is inevitable related to the high level of remittances.

Ramosaj said money from the diaspora is invested mainly in real estate, that is, the purchase of land and housing, and, according to him, these investments are not capitalised in Kosovo.

This means that the fresh money in Kosovo “does not go to those sectors that can increase revenues, such as the processing industry or other development sectors”.

Experts consider that, in order to improve the well-being of citizens, economic growth in Kosovo must be two-sided, for the country to reach the level of European Union states, where it aims to become a member.

Even in reports of international financial institutions, for example the International Financial Corporation, it is said that with the current rate of economic growth that Kosovo has in recent years, it means a 4 per cent or even 5 per cent, Kosovo will need something more than three decades that, in terms of living conditions or living standards, will be opened with countries with the lowest economy in the EU”, Zeka said.

Change of Investments

How are you changed? According to Zeka, promotion of the country's offer for attracting investments to foreign investors is needed, as well as extraordinary growth in the volume of foreign investment.

The current “sectors that attract foreign direct investment do not help in sustainable economic development”, he said, citing real estate and construction.

Zeka suggested that these investments should go to sectors that create jobs and create higher value products that would also have an impact on changing the trade deficit through increased exports and reducing imports.

Reports show that foreign direct investments in Kosovo in 2023 were worth 816m euros, or 84m more than in the preceding year.

Kosovo, for years, has faced a high level of import compared to that of export.

Ramosaj said the trade balance in the report between export and import should be changed, as the majority of Kosovars' tools -- Kosovo's -- respectively -- leave Kosovo due to high-level import.

In 2023, the value of imported goods amounted to 5.9 billion euros, a very high number compared to exports worth 863m euros. /REL/