April 10 (SeeNews) - Kosovo's economy will likely shrink by 1.6% in 2020 as the coronavirus crisis is expected to impact the country's service exports, investments and consumption growth, the World Bank said.
This outlook assumes that the economy will start to recover in the third quarter, the World Bank said in its Europe and Central Asia Economic Update Spring 2020 report, considering data as of March 20.
A potentially prolonged crisis could further slow down growth in 2020 and beyond, the World Bank said in the report published on Thursday.
Kosovo's government has taken steps to increase health sector financing and ease financing constraints faced by the private sector and the financial sector is liquid and well-capitalised. However, a prolongation of the containment measures beyond the second quarter requires careful macro-prudential management, the World Bank said.
In addition, the slower pace of poverty reduction, high incidence and long duration of unemployment continue to be major challenges.
"The level of unemployment is particularly concerning among the young and low-skilled workers," the report reads.
Kosovo recorded an average economic growth of 4.2% in the first three quarters of 2019. It is projected to post annual growth of 4% in full year 2019.