October 5 (SeeNews) - Kosovo's gross domestic product (GDP) is projected to increase by 3.1% in 2022, the World Bank said, revising downwards its June projection for 3.9% economic growth.
The country's economic expansion is then expected to accelerate to 3.7% in 2023, the World Bank said in its autumn Europe and Central Asia Economic Update report published on Tuesday. This is lower by 0.6 percentage points compared to the forecast the bank made in June.
The country's expected economic slowdown is a result of inflationary pressures, which are expected to Kosovo's economic growth is expected to slow down in 2022 as inflationary pressures limit private consumption growth and investments decrease, the global lender said.
On the other hand, net exports and services, supported by higher diaspora demand, credit growth, and public transfers, are expected to be the main drivers of growth.
"The medium-term outlook remains positive. However, it is also mired by downside risks related to food and energy price increases and upward pressures on interest rates," the World Bank added.
Consumer inflation is expected to average 12.1% in 2022, before slowing down to 4% in 2023 and 3% in 2024.
The regional GDP growth of the Western Balkans region is forecast at 3.4% in 2022, down from 7.7% in 2021.
"Growth is projected to remain at an average of 2.9 percent over the forecast horizon, as EU accession reforms and investment mitigate the negative impacts imposed by higher energy and food prices, disruptions to trade and investment flows, and spillovers from the slowdown in euro area activity," the World Bank noted referring to the Western Balkans.
In 2021, Kosovo's economic output increased by an estimated 10.5%.