The Executive Board of the International Monetary Fund (IMF) on Thursday published its annual report on Kosovo, assessing that the economy has continued to grow, but at a slower pace, while inflation has increased and risks, especially those from political uncertainty, remain present.
According to the IMF, after a year of political deadlock, economic activity has slowed. Real Gross Domestic Product (GDP) growth fell to 3.6% in 2025, from 4.6% in 2024. This was due to a decline in exports and weakening demand from the private sector, but was partially offset by increased public spending and investment.
Inflation in Kosovo, as the IMF says, continued to rise and reached around 5.7% in January 2026, mainly due to rising food prices.
The current account deficit, which shows the difference between money coming in and going out of the country, increased to 9.2% of GDP, mainly due to increased imports, especially energy and food.
The IMF has predicted that economic growth in 2026 is expected to be 3.3%, while inflation is expected to increase to 5.9%, then gradually decline to 2% by 2028.
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"The trade deficit will remain high due to large imports. One of the reasons for the increase in the deficit in 2026 is expected to be the temporary shutdown of a coal-fired power plant for renovation," the IMF publication states.
The IMF has also mentioned risks to Kosovo's economy, such as conflicts in the Middle East, tensions in global trade, rising commodity prices, and political uncertainty (such as the presidential election).
But, on the positive side, as this organization says, the European Union's Growth Plan could positively impact economic growth and employment if implemented in a timely manner.
The IMF has recommended that Kosovo not increase budget expenditures too much in 2026, maintain macroeconomic stability, increase public investments, increase budget revenues, improve public finance management, strengthen banking sector supervision, monitor loans and the real estate market, carry out structural reforms to increase competitiveness, reduce unemployment and increase women's participation in the labor market, reduce the informal economy, and improve the energy sector.
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IMF predicts 3.9 percent economic growth in Kosovo
Finally, the IMF assessed that Kosovo's economy has a positive outlook, but faces risks from the political situation and international developments. For this reason, reforms, spending control, and smarter investments are required so that the economy can grow sustainably and move closer to EU standards.
