Investment spending buoys growth
Overview:
The economy slowed somewhat last year but still registered a healthy, positive rate of growth. Investment spending was (and will remain) the key driver here. The government has won an IMF agreement. To do so, it has committed to a program of medium-term fiscal consolidation to allow fiscal space for large-scale infrastructure projects. The combination of implementing sound fiscal policy and improving Kosovo’s infrastructure is very important as it continues to run large external account imbalances due to a very weak export base. The authorities have won a major victory following the International Court of Justice’s ruling that Kosovo’s declaration of independence was not illegal. A new round of recognitions is expected in coming months that will take Kosovo close to winning a much-coveted UN seat.