The International Monetary Fund (IMF) has assessed that the political deadlock in Kosovo in 2025 has affected economic growth. In the concluding statement from the visit to Kosovo, the IMF Mission stated that the economy has shown stability, but that growth has slowed, while inflation has accelerated. Although the outlook, according to the IMF, is positive, some downside risks still remain.
"While the economy has shown resilience in the face of prolonged political deadlock, growth is estimated to have slowed in 2025, while inflation has accelerated and the external current account deficit has widened. The political deadlock has limited the advancement of the implementation of the reform agenda under the EU Growth Plan and access to external financing," the statement reads in its introduction.
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“The prolonged political deadlock has weighed on economic growth in 2025. Growth slowed to 3½ percent (year-on-year) by the end of the third quarter of 2025, from 4¾ percent a year earlier, as private consumption and investment weakened amid slowing credit and real income growth. Rising imports of goods, especially energy products, have led to a deterioration in the trade balance, widening the external current account deficit to 9.6 percent of GDP, from 8.4 percent in 2024. This external growth impact has been partially offset by higher government consumption and public investment, supported by improved budget execution. Inflation accelerated to 5¼ percent (year-on-year) by December, from 1.1 percent a year earlier, driven by rising food prices. Formal employment has continued to register growth, although real wage growth has stagnated while unemployment has remained high (10 percent). This, together with the persistently low labor force participation, especially that of women, is an indication of still untapped capacities in the labor market,” the statement said.
In the table displayed in this statement, it is stated that according to the preliminary analysis, the real growth of Gross Domestic Product in 2025 was 3.4 percent, while for 2026, a growth of 3.8 percent is predicted.
It has recommended a recalibration of fiscal policy for 2026 to reduce the fiscal impulse and address macroeconomic imbalances. “In the medium term, fiscal policy should be anchored in a rules-based framework, balancing macroeconomic stability and development objectives, while building fiscal buffers. The financial sector is in good shape, but the high credit growth in recent years calls for close monitoring of financial sector risks. Building on recent reforms, further efforts are needed to increase systemic resilience, together with strengthening supervision. Structural reforms, based on the EU Growth Plan, will generate growth benefits and unlock significant external financial support in the medium term,” the statement said.
The IMF mission officially visited Kosovo from February 3 to February 13.
During the day, the IMF mission chief for Kosovo, David Amaglobeli, held a press conference with the Minister of Finance, Hekuran Murati, and the Governor of the Central Bank of Kosovo, Ahmet Ismaili. Murati said that during 2025, the Kosovo economy demonstrated high stability and growth has continued at a positive pace.
In 2025, Kosovo was without institutions due to blockades in the Assembly. The February 2025 elections did not produce a new Government and the Assembly did not make any decisions due to the impasse until the constitution.