After a three-year period of average growth above 4 percent, Kosovo’s economy slowed to 3.6 percent in 2025 as private consumption softened and imports increased, while investment gradually strengthened, according to the latest World Bank report published today.
According to the World Bank, although economic growth slowed in 2025, the economy showed resilience amid rising uncertainties.
“The outlook is subject to downside risks, including uncertainty stemming from the impact of the conflict in the Middle East. Careful fiscal management is key to maintaining sustainable fiscal buffers and prioritizing expenditures that accelerate economic growth,” the report states.The World Bank said that higher wages and transfers, together with significant credit growth, supported private consumption and poverty reduction.
It also noted that goods exports remained weak amid low external demand, while growth in service exports — dominated by travel, information and communication technology, and other business services — partly offset the impact of rising imports. Meanwhile, according to the report, rising energy and food prices contributed to higher inflation in 2025, a trend expected to continue in 2026 as recent global developments weaken the outlook.“Maintaining sustainable fiscal buffers and prioritizing growth-enhancing expenditures aimed at increasing productivity and strengthening competitiveness are of great importance for Kosovo at a time of heightened uncertainty. Increasing the participation of young people and women in the labor market could drive stronger and more sustainable economic growth,” said Carole Megevand, World Bank manager for Kosovo and North Macedonia.
According to the World Bank, the medium-term growth outlook is expected to remain subdued in 2026 due to a combination of domestic and external factors and remains exposed to downside risks.
At the same time, rising energy and food prices following the conflict in the Middle East are expected to worsen the already difficult external demand environment, while the current account deficit is projected to remain above 9 percent on average.
