The World Bank expects Kosovo’s economy to grow by 3.6 percent in 2026, while predicting an accelerated growth of 3.8 percent in 2027 and 3.9 percent in 2028. Inflation is expected to reach 6 percent this year before falling to 3.7 percent in 2027 and 3.2 percent in 2028. According to the October BB report, political uncertainty and developments in the Middle East pose risks to the country’s economic perspective.

The World Bank estimates that Kosovo’s economic growth slowed to 3.6 percent in 2025, down from 4.6 percent in 2024.

However, economic activity marked 5.4 percent growth in the first quarter of 2026, supported by net exports and government consumption.

Exports of goods rose 19 percent in the first half of the year compared to the same period in the preceding year. The World Bank links this increase, among other things, to higher global levels of nicotine and increased export of stored metals.

Meanwhile, service exports increased by 13 percent on annual bases, supported mainly by travel, information and communication technology, and other business services.

Overall consumer price inflation reached 6.5 percent in the first half of 2026, according to the report. Food inflation, however, dropped from 8 percent in February to 2.7 percent in July.

Administrative data shows that real wages increased by 9 percent in the first half of the year, compared to the same period in the preceding year.

Tax revenues increased by an average of 9 percent in the first seven months of the year. In the same period, public spending increased by 19 per cent on an annual basis, following increased direct transfers, including pensions and social schemes, as well as pay for the public sector’s 13th salary in March.

The World Bank points out that although the fiscal deficit remains within the legal limit of 2 percent of the gross domestic product, non-efficacy in public spending continues to be present.

The World Bank expects economic growth to be 3.6 percent for 2026 before reaching 3.8 percent in 2027 and 3.9 percent in 2028.

Inflation is projected to be 6 percent in 2026, down by 3.7 percent in 2027 and 3.2 percent in 2028.

According to the institution, political uncertainty could delay structural reforms, affect investor confidence and jeopardise access to external financing. Also, higher fuel prices and the impact of the Middle East conflict on consumer prices can exert additional pressure on economic activity.

The World Bank estimates consumption will continue to be one of the main drivers of economic growth, while geopolitical developments may limit the contribution of external demand.

According to World Bank projections, the poverty rate in Kosovo – measured at the $8.30 threshold a day according to 2021 purchasing power equality – is expected to drop from 22.2 percent in 2025 to 22 percent in 2026. For 2028 the forecast is 20.2 percent.

However, the institution warns that rising food prices remain a threat to poorer families, as food accounts for 64 percent of the consumption of the lowest 10 percent.

The report stresses the need for better social programmes, increased participation in the labour market, improved professional skills and better investment in human infrastructure and capital.

The World Bank estimates that accelerating reforms, improving the business environment and increasing productivity are important for attracting investments and further approaching Kosovo with the European Union.

World Bank full report on Kosovo

Source Layer: RTKLive