Page 50 - SE Outlook Regions 2023

slowdown since August 2022, when it dropped to 13% from 14.2% in the previous
month.

In November, year on year, the inflation was caused mostly by an increase of prices
of food by 19.5%, electricity, gas and other fuels by 16.8%, whereas solid fuels
jumped by 43.7%, and transport costs by 10.5%.

The World Bank projected an annual average inflation in Kosovo of 12.1% in 2022
and 4% in 2023.

According to the International Monetary Fund (IMF), average inflation in Kosovo is
expected to decline to 4% – 5% in 2023, according to the baseline scenario.
However, forecasts are subject to significant risks as higher energy prices could lead
to higher inflation and input costs, as well as to electricity rationing, negatively
impacting growth.

2.5.4 Industrial production

Kosovo’s industrial production averaged 3.54% from 2013 until 2022, reaching an all
time high of 43.6% in June of 2021 and a record low of -16.9% in June of 2020.

On the production side, services supported by higher diaspora demand, credit growth
and public transfers are expected to be the main driver of growth, according to the
World Bank.

Kosovo’s producer price index (PPI) grew by an annual 17.2% in the third quarter of
2022, speeding up significantly from a 10% y/y increase in the previous quarter, data
from the statistics agency KAS indicated.

After falling for most of 2020, PPI started to increase since the fourth quarter of 2020
and speeded up the pace of growth throughout 2021.

50 SE Outlook 2023 www.intellinews.com