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KOSOVO
Business & Investment Opportunities
two year decrease of 11.6%, total government expenditures
actually increased by 6.2% in 2007 to €426
million or 17.3% of GDP.
Moreover, the country bucked the regional trend
and recorded a budgetary surplus of €233.7
million which represents approximately 9.8% of
GDP. This was largely the result of an increase in
non-tax revenues. While the country has a current
account deficit of 22.5% of GDP driven by a trade
deficit of 9%, exports have been increasing steadily.
Indeed, Kosovo’s exports grew by a staggering 54%
in 2006. In 2007, exports reached €146.6 million
mainly consisting of minerals, base metals, vegetable
products and foodstuffs. Government estimates
suggest that exports could climb as high as €350
than €1 billion invested since the year 2000. This
impressive growth is expected to increase rapidly
with the government estimating that the FDI level
will touch €700 million in 2008.
Kosovo’s liberal trade regime has also stimulated
imports into the country. Kosovo is a member of the
Central European Free Trade Agreement (CEFTA)
which allows for free trade between the members of
the bloc and enables producers to access a regional
market of 28 million consumers free of customs
duties. Indeed, the largest number of exports came
from CEFTA countries in 2007. Overall imports have
been increasing steadily since 2002 and had touched
almost €1.6 billion in 2007. This is a significant
increase in a two year period for imports were below
Kosovo real GDP by sector, in million euro
Private Sector
Government Sector
Donor Sector
3.5
3.0
2.5
-
-
-
2.33
Net Exports (right axis)
2.45
Real GDP Growth (right axis)
2.65
3.1
2.04
3.5
-
-
-
5
4
2.0
-
2.0
-
3
1.5
1.0
0.5
-
-
-
0.51 0.43
0.45
0.38
0.40 0.36
0.43
0.35
-
-
-
2
1
0.0
-0.5
-1.0
-1.5
-
-
-
-
-0.95
-1.0
-0.98
-1.01
-1.11
- 0
-
-1
-
- -2
2004 2005 2006 2007
Source: 2007 annual report of the Central Banking Authority of Kosovo
million in 2008 as the country’s productive capabilities
increase dramatically. The largest export
market for Kosovo is the EU closely followed by the
Central European Free Trade Agreement (CEFTA)
countries.
Likewise, the country has had considerable success
in attracting foreign direct investment (FDI). High
profile European banks, Raiffeisen and Pro-Credit
moved into the market during the transition phase.
However, they are just the most visible tip of the
iceberg. According to Business Registry data for
2007, Kosovo has 2,012 companies of foreign or
mixed ownership. Such investment has translated
into an FDI figure of €300 million for 2007 with more
€1 billion in 2005. These imports have not only been
stimulated by CEFTA but also by Kosovo’s non-reciprocal
customs free access to the EU market through
the EU Autonomous Trade Preference (ATP) regime.
The main imports of commodity goods are centred
on minerals and prepared foodstuffs.
The economy is therefore becoming increasingly
robust with trade, construction and the financial
services sector being the mainstay of growth.
Indeed, driven by the banking industry, the financial
sector has been expanding rapidly. According to
the Central Bank of Kosovo, financial sector assets
reached 58.5% of GDP in 2007 up from 49% in 2006.
The banking sector makes up the lion’s share of this
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