Page 89 - SE Outlook Regions 2022

by opening offices in Munich and Boston.

In the software sphere, IT and telecoms company Infobip achieved tech
unicorn status – signifying a startup valued at over $1bn – in August
2020, when it raised over $200mn in its first funding round from One
Equity Partners.

3.5 Real economy - Kosovo

3.5.1 Retail

Sales by vendors of food, drinks and tobacco in Kosovo fell by 2.8% y/y
in the second quarter of 2021, after dropping 14.6% y/y in the previous
quarter, according to statistics agency data.

Sales of food, drinks and tobacco in specialised stores have been
falling year on year for six consecutive quarters since the first quarter of
2020 with the outbreak of the coronavirus pandemic.

Compared with the previous quarter, sales of food, drinks and tobacco
in specialised stores increased 5.8% in 2Q21, reversing a 36.7%
decrease in 1Q21.

3.5.2 Banks

According to the IMF, Kosovo’s banking sector remains resilient overall.
Capital and liquidity buffers are strong and non-performing loans
(NPLs) are low, though the improvement in many financial soundness
indicators is partly linked with the policy response to the pandemic.
Despite the absence of systemic risks, there are pockets of
vulnerabilities related to the fast increase in lending to the construction
sector by smaller banks.

Although, according to IMF forecasts, the Kosovar economy had a
decline of 6% due to COVID-19 in 2020, the banking sector remains
well capitalised and profitable. The report estimates that financial
services and bank lending have improved significantly in recent years.
In March 2021, non-performing loans were at the level of 2.7%, while
interest rates dropped significantly, from an average of 12.7% in 2012
to an average of 3.1% in March 2021. Overall, Kosovo’s NPLs remain
the lowest in the Western Balkans region.

According to the central bank of Kosovo, bank lending continues to be
a very important and sustainable source of private sector financing in
the country. The value of bank loans had reached €3.57bn by
September 2021, marking a significant annual increase of 12.2% y/y.
However, despite the satisfactory trend of increasing bank lending, it is
considered that the level of financial intermediation in Kosovo continues

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