"Kosovo's economy, growth of 3.8% in 2026" - IMF lowers forecast. Also lists risks
The International Monetary Fund (IMF) said it expects Kosovo's economy to grow by 3.8% this year, lowering its forecast made in October by 0.2 percentage points, as a recent political impasse is resolved, but domestic and external risks remain significant.
A year-long political deadlock that blocked government formation slowed economic growth in 2025. The economy grew by 3.5% in the third quarter of 2025, after a 4.75% growth a year earlier, the IMF said in a staff closing statement for its Article IV Consultative Mission.
Parliament's approval of a new government proposed by the winner of the snap elections, the Vetevendosje Movement, last week is expected to boost growth to around 4% in the medium term, supported by structural reforms as part of the EU Growth Plan and free access to external financing.
"A recalibration of fiscal policy in 2026 is needed to reduce the fiscal impulse and address macroeconomic imbalances. In the medium term, fiscal policy should be anchored in a rules-based framework, balancing macroeconomic stability and development objectives, while building fiscal buffers," IMF staff said.
The statement underlines that moderating public wage growth would not only support prudent fiscal policies, but would also limit the impact of rapid private wage growth outpacing productivity growth and help protect competitiveness.
However, according to the IMF, risks remain, such as potential political uncertainty, tensions in Serb-dominated areas in the north, and adverse global conditions.
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