Kosovo continues to face significant economic challenges, with the lowest income per capita compared to the regional and European Union (EU) averages. According to the World Bank, the poverty rate remains high at 19.2%, while the Gross Domestic Product (GDP) per capita stands at only €5,889. This figure starkly contrasts with Luxembourg, which leads the EU with a GDP per capita of €137,839, followed by Ireland, the Netherlands, Denmark, and Austria.
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| Euros in banknotes and coins on a table and the transparent Kosovo flag modified with digital tools |
Addressing Poverty and Income Disparities
Jane Sprouster, the World Bank’s Deputy Manager for Kosovo, highlighted in an interview with KosovaPress the need for Kosovo to transition to a competitive economic growth model. “To achieve sustainable progress in reducing poverty, Kosovo must create more high-quality jobs, particularly for its young population. This shift is essential to bridge the income gap with EU countries and secure a brighter future for its citizens,” said Sprouster.
She emphasized that Kosovo’s economic transition requires moving away from a consumption-based economy to one focused on production and innovation. This would involve enhancing exports and diversifying the production base, supported by improved infrastructure and a favorable environment for innovation.
Economic Growth Projections
The World Bank projects Kosovo’s economic growth to accelerate to 3.8% in 2024 and reach 4% in the medium term. With this growth, poverty is expected to decline from 19.2% in 2024 to 17.1% by 2025. Key contributors to this growth include the services and construction sectors, while export recovery is anticipated to gain momentum by 2026. Additionally, inflation is expected to slow to around 2% as international prices stabilize.
Reforms and Investments
Kosovo faces an urgent need for reforms that demand substantial fiscal resources. These reforms include implementing a new energy strategy, improving water security, and strengthening human capital. In 2024, the World Bank’s projections highlighted that only 37% of the working-age population in Kosovo is employed, underscoring the pressing need to address unemployment, the highest in the region.
World Bank Support for Kosovo
In 2025, the World Bank plans to support Kosovo with approximately $100 million in loans and grants for financial sector development, trade facilitation, and transportation projects. Sprouster noted that this support builds on the Bank’s recent investments in digital governance, early childhood education, and healthcare strengthening.
The World Bank also approved a $100 million Development Policy Financing operation, focusing on enhancing fiscal policy effectiveness, improving the investment climate, and laying the foundation for greener economic growth. However, these operations await parliamentary ratification before implementation and disbursement can commence.
Looking Ahead
Sprouster expressed optimism about Kosovo’s potential to leverage these reforms and investments to accelerate growth and reduce poverty. She highlighted the importance of fostering a competitive economic model and addressing structural challenges to ensure sustainable development. “With a focus on innovation, export growth, and infrastructure improvement, Kosovo can overcome its income gap with EU countries and create a prosperous future for its citizens,” she concluded.
Kosovo’s economic journey remains challenging, but with strategic reforms and international support, it holds the potential to achieve meaningful progress in the coming years.