IMF: Kosovo economy slowed down during 2025, inflation continues to rise

By Report, economic growth has dropped to 3.6% in 2025, compared to 4.6% in 2024, as a result of reduced exports and private demand.

Inflation has continued to rise, reaching around 5.7% in January 2026, mainly because of rising food prices.

Also, the deficit deepened to 9.2% of Bruto Product, as a result of higher imports of energy and food.

However, according to the report, formal employment has marked growth, while wage growth is moderate compared to a year ago.

The IMF warns that economic prospects remain uncertain and exposed to risks, such as global tensions, regional conflicts and political instability in the country.

For 2026, a further slowdown of economic growth is envisioned at 3.3%, while inflation could reach 5.9%, meanwhile, is expected to gradually stabilise in the years ahead.

In this context, The IMF recommends that fiscal policies be revised to avoid deepening the deficit in 2026 and to preserve macroeconomic stability in the medium term. According to them, increased quality public investment, spending control, and improved revenue collection is necessary.

As for the financial sector, The IMF estimates it remains stable, but requires further strengthening of monitoring and regulation, as well as improving mechanisms for crisis management and systemic risks.

In the end, The IMF stresses that structural reforms are essential for increased competitiveness and sustainable economic development.

Implementation of the European Union's growth plan and reforms in the labour market, energy and public administration are considered key to improving Kosovo's economic perspective.