Remittances at a record high: Kosovo's economy is fighting for survival

Remittances at a record high: Kosovo's economy is fighting for survival

In the first half of 2025, Kosovars from the diaspora transferred an impressive 651 million euros to Kosovo. This represents a slight increase compared to the same period in 2024. Despite this positive development, economists warn that the increasing remittances are not signs of economic improvement but rather reflect an internal crisis. Safet Gërxhaliu highlights that the majority of remittances are used for daily consumption and only marginal investments go into long-term projects.

Remittances, which provide significant support for many families, are increasingly seen as a risk. Florin Aliu emphasizes that a heavy reliance on these remittances endangers the country's well-being. A potential decline in remittances could have an immediate negative impact on Kosovo's level of development. Therefore, experts recommend developing policies aimed at channeling these remittances towards productive sectors and sustainable development projects to stabilize the economy in the long term.

Economic framework conditions

Despite real GDP growth of 4.4% in 2024, further growth of 3.9% is expected in 2025. However, these optimistic growth forecasts are overshadowed by political uncertainties both at home and abroad, which are dampening future growth prospects. Following the parliamentary elections in February 2025, a political stalemate has emerged as the ruling Vetëvendosje party has lost its absolute majority.

The EU is urging Kosovo and Serbia to consistently implement the Brussels and Ohrid agreements in order to promote political stability. In this context, the rating agency Fitch assigned an international credit rating of “BB- with a stable outlook” for Kosovo for the first time in April 2024, which is seen as a positive signal for potential investors.

Trade relations and sectors

The economic news from Kosovo shows positive developments in bilateral trade, especially with Austria, in 2024. Economic growth in Kosovo is driven by private consumption, business investment and exports of services. In particular, the manufacturing sector recorded growth of 3.6% in 2024, followed by energy supply at 7%, wholesale and retail trade at 3% and financial services at 4%.

Political stability under Prime Minister Albin Kurti contributed to a positive economic climate ahead of the February 2025 elections. However, the region remains vulnerable to internal and external challenges that could threaten long-term economic stability.

Overall, a mixed picture emerges for the economy in Kosovo: increasing remittances mean short-term relief for many households, but the basic economic structures require sustainable solutions in order to overcome the fragile state of the economy.