PRISTINA (Kosovo), November 6 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) said on Wednesday it expects Kosovo's economy to grow by 4.0% this year, affirming its last projection from May, as domestic demand is seen remaining the main growth driver.
“After 3.8% GDP growth in 2018, the economy expanded by 4.2% year-on-year in the first half of 2019,” the EBRD said in its November 2019 Regional Economic Prospects report.
Growth was primarily driven by investment but private consumption was also an important contributor, the bank noted.
Economic growth is projected at 4.0% next year, unchanged from the May forecast.
“However, economic growth is translating very slowly into higher employment,” the EBRD said, adding that in the second quarter of 2019, the employment rate stood at 30%, around 1 percentage point higher than a year before.
The unemployment rate fell by 4 percentage points year-on-year, but at 25% it remained high, especially for young people, close to 50%.
“While upside risks relate to the possible start of construction of a major new power plant and to faster reform progress, weaknesses in public investment management, the economic slowdown in the European Union, domestic political uncertainty and deteriorating relations with neighbours represent the main downside risks,” the EBRD noted.
In May, energy group ContourGlobal and Kosovo's government said General Electric has been selected as the preferred bidder for the construction and long-term maintenance of Kosova e Re, a 500 MW coal-fired power plant expected to cost around 1.3 billion euro ($1.4 billion).
Economic growth in Southeast Europe is seen decelerating from 3.3% in 2019 to 3.0% in 2020, but still remaining above the forecast average growth of all EBRD regions, of 2.4% and 2.9% in 2019 and 2020, respectively. The Southeast Europe region in the EBRD's report comprises Bulgaria, Cyprus, Greece, Romania, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia.
($ = 0.90060 euro)