Kosovo economy under Kurti: Record trade deficit in two years, from 2.8 to 4.7 billion euros

kosovo ekonomija
Source: reporteri

According to the data of the Agency for Statistics of Kosovo, the trade deficit in 2022 amounted to 4.7 billion euros, which is almost two billion more than in 2022. The President of the Kosovo Alliance, Agim Shahini, believes that the Government of Kosovo does not have a strategy for the development of the economy, while the economist Safet Gerxhaliu points out that political stability is the key to development.

While opposition MPs criticize the Kosovo Government for destroying the economy in the past two years, Kosovo Prime Minister, Albin Kurti, and Finance Minister, Hekuran Murati, use every opportunity to emphasize that Kosovo has recorded economic development during that period.

However, LDK deputy Avdullah Hoti recently drew attention to the fact that the government was not dealing with economic development, adding that there had been a drop from ten to three percent. He often states that Kosovo has increased the import of goods from Serbia, while on the other hand, it does not promote the opening of new factories and the arrival of foreign investors.

Economists from Kosovo point out that inflation has reached its highest level, and according to the data of the Agency for Statistics, it amounted to 12.1 percent in January 2023, and the reason for this is the increase in the prices of basic foodstuffs.

As of April 1, the price of electricity rose again by 15 percent, and wages, although the Law on Wages came into force, remained the same, and for certain categories, they were even reduced.

Shahini: The Government of Kosovo does not have a strategy on how to help businesses

All of this, say experts on the economic situation, affects the economy of Kosovo, as well as the economic situation in the countries in the region, because as they state, by importing goods, Kosovo also imports inflation.

The president of the Kosovo Business Alliance, Agim Shahini, pointed out that Kosovo had the biggest deficit in the Balkans because the Government of Kosovo did not have an appropriate strategy to help entrepreneurs.

"Kosovo is still the country with the biggest deficit because it does not have a strategy for the development of domestic production and economy. For the first time since the war, we have a deficit reduced to 18 percent of all imports. We import about 82 percent and export 18 percent, which is a large figure in relation to previous years, but we still have the biggest deficit, because the Government of Kosovo does not have a strategy to help domestic production and other entrepreneurs in Kosovo," Shahini said.

Shahini believes that all this has a very bad effect on the economy because Kosovo ranks first in the Balkans in terms of money exports.

"And that cash, Kosovo buyes at the highest interest rates in the Balkans and in Europe. The economy of Kosovo, regardless of economic growth, is still the poorest in the Balkans, if we look at GDP in other countries," he added.

He pointed out that despite government officials talking about economic development; the GDP growth base was very low.

"The government talks about economic growth; however, if we look at that growth per capita, we have three to four percent on a base of 5,000 dollars. This means that economic growth per capita is five euros per year. If we look at the GDP of Serbia, it is about 10 euros per capita, and that is not good, because the base of growth is quite low," Shahini said.

Many things affect foreign investors, Shahini says, adding that Kosovo depends on diaspora capital.

"We still have the highest price of electricity, which is a big problem; electricity in Kosovo is the most expensive in the Balkans. Investors see what the price of electricity is, secondly what are the benefits and the fiscal policy. Kosovo is not in a good position for all this and has no strategy. And still, we depend on the capital of the diaspora, and without it, Kosovo would have a hard time surviving in terms of internal development," Shahini emphasized.

Regarding the call for a boycott of products from Serbia, Shahini says that this does not affect the exchange, given that Kosovo imports the most goods from Serbia.

"The call for a boycott of goods is the marketing of a certain group that has no authority in Kosovo, because it does not represent anyone, it is the citizens who created their own group. If we look at the statistics of the exchange of goods with Serbia, we have 432 million last year, which is increased compared to the year before. Statistics do not show that the exchange has declined. There are citizens who believe that products from Serbia should not be bought, but those items are very present in Kosovo and with the CEFTA member states, Kosovo has the largest exchange with Serbia," Shahini concluded.

Gerxhaliu: Political stability is the key to the development of not only Kosovo but the entire Western Balkans

Economist Safet Gerxhaliu pointed out for Kosovo Online that in Kosovo one could not talk about pure economic problems without political connotation, because political connotation slowed down economic projects and development.

"If this period from last year to the present day will be marked by something, it is a distance between the public and private sectors, and what is worst and what hurts the most is that, the budget provided for certain projects, was not used or only 13 percent was used. We have high inflation, we have a record import from last year of about 5.8 billion dollars, so there is no reason for euphoria because the more is spent, the more is built, the more projects there are, the citizens benefit, and the business also benefits. In the context of the modern economy, it is utilization and control of great importance and not to say that we did not invest. It is better to use that money in different ways, for public and private dialogue and partnership, to have dialogue with municipalities, and to have as many perspectives as possible for young people. The common denominator of the solution to the current problems in Kosovo is to achieve political stability because without that and without dialogue with Serbia, it will be difficult to talk about economic prosperity and foreign investments in Kosovo," Gerxhaliu said.

As he added, it was necessary for the government to direct the positive results achieved in some sectors to improve the lives of citizens.

"Politics is the one that needs to log some positive results, we have an increase in revenue in customs, in revenue administration, but don't forget that we live in a time of inflation, and through all these projects we import inflation. So what you bought the year before last for 100 euros, now, you cannot buy for 200, and if it is a positive result, then we should study the economy and put it in some other dimensions. We have citizen dissatisfaction, and private sector dissatisfaction, so these positive results should be felt by the citizens of Kosovo, and not that through investments Kosovo becomes a welfare state because the question is what the perspective will be then. We need economic development, to strengthen the private sector, to increase wages because we have become an import-dependent country," Gerxhaliu added.

He pointed out that products from Serbia could not be nationalized and given special epithets when there were many world brands in Kosovo.

"The worst thing, not only in Kosovo, but in the Balkans in general, is the existence of that pseudo-patriotism accompanied by nationalism, and in that context, nationalism is also applied to economic flows. We must understand that the Western Balkans is part of the European Union, and the sooner we understand that the faster our way to Europe will be. And on the other hand, trade is like water and finds its own way. And if there are barriers, there are, not only between Kosovo and Serbia, but also between Bosnia and Herzegovina and Kosovo, Bosnia and Herzegovina and Montenegro, and between Albania and North Macedonia, so we all have to work on canceling them. We must fulfill the agreements of the Berlin Process, the free flow of goods, services, people, and capital. At the end of the day, we must understand that it is the consumer who decides for himself what to buy and not what is imposed on him, so trade has a completely different meaning and because today the price dictates the purchasing power, it is a completely different indicator. On the other hand, you cannot nationalize and give an epithet to products from Serbia when we have so many world brands in Kosovo," Gerxhaliu said.

According to him, Kosovo urgently needs political stability in order to ensure economic prosperity.

"Political stability is urgently needed in Kosovo. When you have that, then you have time for economic prosperity that you can build through joint investments, through diaspora capital, and through the strengthening of the private sector in Kosovo. The priority of all priorities should be political development, but under some normal conditions and to understand that regional cooperation has no alternative. It is not only the Berlin process, it is not only Ohrid, it is not Washington. Dialogue has no alternative and no possibility for replacement. To give the opportunity to talk, to remove barriers, to cooperate, because that's the only way we can be serious towards our citizens and towards the EU and other world powers," Gerxhaliu concluded.