Page 40 - SE Outlook Regions 2022

Consumer prices (avg, % yoy) 0.3 1.5 1.1 2.7 0.2 3.1 3.6

Consumer prices (eop, % yoy) 0.5 2.9 1.2 -0.3 1.4 1.6

General budget balance (% of GDP) -1.4 -2.9 -2.8 -7.7 -5.9 -2.9

Public debt (% of GDP) 16.2 17.0 17.6 24.5 28.7 30.4

Current account balance (% of GDP) -5.4 -7.6 -5.5 -7.5 -6.4 -6.1

Source: IMF, statistics office

2.5.1 GDP growth

According to the International Monetary Fund (IMF), Kosovo’s GDP is
expected to grow by 3-4% in 2022 in the absence of any negative
pandemic-related surprises, following a projected real growth of 7-8% in
2021.

In 2021, Kosovo experienced a much faster recovery than previously
expected. The key driver behind the faster recovery was the rebound in
diaspora visits that fuelled Kosovo’s service exports and informal
remittances.

Kosovo's Minister of Economy Artane Rizvanolli projected that GDP
growth in 2021 could be even higher than the projection of 7.9%
included in the budget revision, possibly reaching 10%.

The 2022 GDP growth will be driven partly by 2021’s strong economic
momentum, according to the IMF. The economic activity will also be
supported by continued domestic credit expansion and fiscal policy
easing, though the size of the latter will depend on the capacity to
increase the absorption of externally-financed investment projects. The
rapid surge of cases in August 2021 is a reminder that new virus
mutations continue to be the main downside risk. In this regard, still-low
spare capacity of hospitals may result in the need to renew mobility
restrictions should cases rise again. On the upside, the implementation
of an ambitious programme of government measures can push growth
higher, as well as the continuation of extraordinary diaspora support,
which is projected to subside somewhat in the IMF’s baseline
projection.

The European Bank for Reconstruction and Development (EBRD) has
projected growth of 4.5% for 2022. According to the EBRD, the main
risks to the outlook relate to the pandemic and potential weaknesses in
the external sector.

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