Page 86 - bne IntelliNews Southeastern Europe Outlook 2025

In 2022, Berat Rukiqi, president of the Kosovo Chamber of Commerce, confirmed Lidl's plans to establish stores in Kosovo, describing it as "good news" for the local economy and producers. He highlighted that this development could facilitate the export of local products to Lidl markets abroad.
Kosovo recorded a total FDI inflow of €657.3mn in the first nine months of 2024, rising by 6.2% from the same period in 2023 (€618.8mn). According to the central bank, the sectoral distribution of FDI in Kosovo is dominated by the real estate and financial sectors.
5.5.2 Banks
Kosovo’s banking sector remains profitable, with a return on equity of 19% as of August, a Tier 1 capital ratio of 14.3%, and a low non-performing loan ratio of 2.1%, which is fully provisioned, according to Fitch.
New lending increased by 15% in the first eight months of 2024, with only a partial pass-through of European Central Bank (ECB) policy rate hikes. Foreign ownership accounts for 83% of the sector's assets, with EU banks representing just over half, thereby bolstering prudential standards.
According to the IMF, Kosovo’s banking system remains liquid, well capitalised and profitable, with a low level of non-performing loans and ample coverage of provisions. The IMF praised Kosovo’s progress in structural reforms and financial sector regulation, including upcoming laws on banks and payments, aligning with EU standards. The proposed laws on banks and payments aim to enhance the legal framework for improving banking supervision and advancing Kosovo's integration with the EU.
At the end of September, total assets of Kosovo's banks reached nearly €8bn, with commercial banks reporting an aggregate net profit of €138.6mn, central bank data showed.
The non-performing loan (NPL) ratio was 2.1%, while the coverage of bad loans with loan loss provisions stood at 123.8%.
5.5.3 Industry
Kosovo's economy has several industrial sectors, with the most developed being ferrous and non-ferrous metals, metallurgy and mining. In northern Kosovo, near the town of Mitrovica, lies the Trepça mining complex, a vast and now deteriorated industrial site.
Key export industries in Kosovo include agriculture, mining, home bedding and construction materials.
Kosovo has implemented a flat corporate income tax rate of 10%. To stimulate investment, the government offers VAT-related incentives, such as a six-month VAT deferment for companies importing capital goods, provided they present a bank guarantee. Suppliers are also
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