Growth in Kosovo is projected at 3.6 percent in 2016, down slightly from 3.9 percent in 2015, and is forecasted to reach 3.7 percent by 2018, according to the latest Southeast Europe Regular Economic Report (SEERER), launched today in Brussels.

Fiscal adjustment measures, such as tax reforms and the fight against informality, continued to boost revenue performance in the first half of 2016. However, the unanticipated large number beneficiaries of social transfers program for war veterans added to fiscal pressures and pushed the deficit to about 2.5 percent of GDP. FDI fell by 36 percent in the first half of 2016. Most of the FDI this year continued to be attracted by real estate, rentals, and business activities, followed by the financial sector. The financial sector is performing well, with profits high, Non-Performing Loans low, and lower interest rates that are boosting lending. The outlook remains positive. The outlook remains positive. Economic growth in Kosovo is supported by domestic demand however more needs to be done to gradually shift to higher domestic productivity and enhanced external competitiveness, if Kosovo is to close the income gap with Europe in the medium term.

At the regional level, economic growth is expected to reach 2.7 percent in 2016, up from 2.2 percent in 2015. Moderate acceleration of growth is projected to continue through 2017 and 2018.

“Underpinning the acceleration in growth was Serbia, the region’s largest economy,” says Barbara Cunha, World Bank’s Senior Economist and lead author of the report. “Serbia moved from 0.7 percent growth last year in the aftermath of the 2014 floods to an expected 2.5 percent this year.”

http://www.worldbank.org/en/news/press-release/2016/09/27/growth-continues-unemployment-remains-high-in-kosovo