Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities.
Despite an annual estimated 5.3 percent decrease in GDP due to the COVID-19 pandemic, Kosovo’s strong economic recovery propelled its economy above its pre-COVID-19 GDP. Given global supply chain disruptions, high inflation levels, unreliable energy production, and anticipated expensive energy imports, forecasts for economic growth in 2022 are less optimistic but remain positive. The IMF forecasts 2.8 percent growth in 2022, whereas the World Bank forecasts growth between three and four percent. As of June 2022, Kosovo’s financial sector and public sector finance remain stable.
Due to the relative importance of imports for meeting consumer demand, the country maintains a persistent trade deficit. Leading domestic industries include agriculture, mining, the home bedding industry, and construction. Kosovo’s largest exports are scrap metal, nickel, lead, and mattresses. Kosovo’s highly pro-American population welcomes U.S. investment in various sectors, including:
- Energy: Faced with a significant domestic power deficit and high import costs, Kosovo is looking to expand its power generation capacity and diversify its energy supply, including through commitments to renewable energy. The vast majority of electricity in Kosovo is currently produced by two Yugoslav-era lignite-fired thermal power plants, known as Kosovo A and Kosovo B, which are capable of producing up to 880 MW. The Government of Kosovo is currently drafting an energy strategy where it is expected to announce the eventual decommissioning of one of the coal- fired power plants, set a renewable energy target for 35 percent of all electric energy consumption by 2031, and construction of 390 MWhs of battery storage capacity to facilitate renewable energy and improve electrical stability. As Kosovo modernizes its power generation and diversifies its energy supply, natural gas, battery storage, energy efficiency technologies, and renewable energy generation present potential market opportunities.
- Mining: Historically an important contributor to Kosovo’s economy, mining has declined in relevance due to a lack of investment in equipment, facilities, and development of new mines. The sector has significant foreign investment potential, and the Independent Commission of Mines and Minerals (ICMM) has issued over 500 exploration and mining licenses since 2007. In 2016, the Kosovo Assembly passed a law that transformed Trepca – the biggest mining company in Kosovo – from a socially owned enterprise into a joint stock company with the majority of shares belonging to the government.
- Telecommunications and Information Technologies: Kosovo’s telecommunications operators have transitioned to 3G and 4G services. The Government of Kosovo is working to position the country as a regional hub for information technology (IT)-related products and services, building on the strong IT and English-language skills within the workforce. There are a growing number of IT companies focused on outsourcing for European and U.S. companies, and the number of inbound and outbound call centers is growing. Kosovo Telecom, a state-owned company, is under significant financial pressure and on the verge of bankruptcy. IPKO, another leading mobile and broadband operator, may soon be sold by its foreign parent company, Slovenian state-owned Telekom Slovenije. Telekom Slovenije began a process to sell IPKO in 2020 but later cancelled the transaction. As of July 2022, it remained unclear whether Telekom Slovenije would restart a potential sale.
- Health: Kosovo has an urgent and growing need for quality basic and specialized health and medical services, personnel, facilities, and products. The sector is dominated by public-sector services, but private-sector investment has recently increased. Many of Kosovo’s citizens travel to other countries in the region to meet their immediate health-care needs. Local solutions present a potentially lucrative opportunity for outside investors. The COVID-19 pandemic has caused the Ministry of Health to purchase additional products and services for management of the crisis, but the fragile health system in Kosovo has struggled to manage the sudden influx of patients seeking treatment. As in other countries, Kosovo has experienced a rise in demand for telemedicine services because of the pandemic. Dental clinics, eye surgery centers, and facilities offering cosmetic procedures are also on the rise.
- Waste Management and Recycling: As a developing country, Kosovo’s waste has increased faster than its capacity to manage it. Illegal dump sites are common, landfills are insufficiently constructed and managed, and all hazardous waste must be exported for proper handling and disposal. Although recycling has only recently begun in Kosovo, certain companies in niche markets have been able to operate profitably in this sector. Kosovo will likely reform its waste collection, treatment, and storage infrastructure soon to comply with EU regulations.
- Other Services: As Kosovo’s economy develops, the need for expert financial, legal, architectural, engineering, software development, public relations, and graphic design services will grow.