Kosovo: Economy Overview

Over the past few years Kosovo's economy has shown significant progress in transitioning to a market-based system and maintaining macroeconomic stability, but it is still highly dependent on the international community.

Economy Overview

Kosovo is still highly dependent on the diaspora for financial and technical assistance. Remittances from the diaspora - located mainly in Germany and Switzerland - are estimated to account for about 15% of GDP, and donor-financed activities and aid for another 15%. Kosovo's citizens are the poorest in Europe with an average annual per capita income of only $2,500. Unemployment, around 40% of the population, is a significant problem that encourages outward migration and black market activity. Most of Kosovo's population lives in rural towns outside of the capital, Pristina. Inefficient, near-subsistence farming is common - the result of small plots, limited mechanization, and lack of technical expertise. With international assistance, Kosovo has been able to privatize 50% of its state-owned enterprises (SOEs) by number, and over 90% of SOEs by value. Minerals and metals - including lignite, lead, zinc, nickel, chrome, aluminum, magnesium, and a wide variety of construction materials - once formed the backbone of industry, but output has declined because of ageing equipment and insufficient investment. A limited and unreliable electricity supply due to technical and financial problems is a major impediment to economic development. Kosovo's Ministry of Energy and Mining has solicited expressions of interest from private investors to develop a new power plant in order to address Kosovo and the region's unmet and growing demands for power. The official currency of Kosovo is the euro, but the Serbian dinar is also used in Serb enclaves. Kosovo's tie to the euro has helped keep core inflation low. Kosovo has one of the most open economies in the region, and continues to work with the international community on measures to improve the business environment and attract foreign investment.

GDP (official exchange rate):

$3.237 billion (2007 est.)

GDP - composition by sector:

agriculture: 20%
industry: 20%
services: 60% (2007 est.)

Labor force:

550,000 (2009 est.)
country comparison to the world: 156

Labor force - by occupation:

agriculture: 16.5%
industry: NA%
services: NA% (2007 est.)

Unemployment rate:

43% (2009 est.)
country comparison to the world: 189

Investment (gross fixed):

30% of GDP (2007 est.)
country comparison to the world: 25

Budget:

revenues: $1.19 billion
expenditures: $1.22 billion (2007 est.)

Inflation rate (consumer prices):

5.3% (2007 est.)
country comparison to the world: 150

Commercial bank prime lending rate:

13.79% (31 December 2008)

Agriculture - products:

wheat, corn, berries, potatoes, peppers

Industries:

mineral mining, construction materials, base metals, leather, machinery, appliances

Oil - production:

0 bbl/day (2007)
country comparison to the world: 148

Natural gas - production:

0 cu m (2007)
country comparison to the world: 172

Current account balance:

$-964 million

Exports:

$527 million

Exports - commodities:

mining and processed metal products, scrap metals, leather products, machinery, appliances

Imports:

$2.6 billion f.o.b.

Imports - commodities:

foodstuffs, wood, petroleum, chemicals, machinery and electrical equipment

Debt - external:

$NA

Exchange rates:

Source: CIA - The World Factbook