Economic Report Kosovo 2023: Opportunities and challenges for Switzerland
The Economic Report 2023 published by the Swiss Embassy in Kosovo sheds light on the country’s economic development and highlights key trends that are also important for Switzerland. Despite global uncertainties, Kosovo’s economy is resilient and offers interesting opportunities for Swiss companies and investors.
Economic developments in Kosovo
1. Declining economic growth
Kosovo recorded slower economic growth of 3.3 % in 2023 (2022: 4.3 %). This is mainly due to declining net exports. On the positive side, public investment grew and remittances from the Kosovar diaspora accounted for an impressive 14% of GDP. Inflation fell from 11.6 % (2022) to 4.9 %.
2. stable financial and banking systems
Kosovo’s banking system is solid: the share of non-performing loans remained at a very low level of 2.1 % and capitalisation rose slightly to 16.1 %. Public debt fell to 17.5 % of GDP – the lowest level in the region.
3. challenges in the labour market
The unemployment rate is 11.5 %, but the low labour market participation rate (34.9 %) and high gender inequality remain problematic. The shortage of skilled labour is exacerbated by the emigration of workers, which could affect competitiveness in the medium term.
Significance for Swiss companies
1. stronger trade relations
Bilateral trade between Switzerland and Kosovo grew by 4.2 % in 2023. Switzerland became the fifth largest export market for Kosovo, while vehicles, pharmaceutical products and machinery are among Switzerland’s most important exports to Kosovo.
2 Growing influence of Swiss investors
With a share of 20.8 %, Switzerland remains the second largest foreign investor in Kosovo. The main sectors are real estate, banking, finance and renewable energies, as demonstrated by the Swiss Orllati Group’s participation in a major solar energy project.
Opportunities for Swiss companies
Kosovo offers attractive conditions for investments in: – Information technology (IT):
- IT exports increased by 36% to 285 million euros in 2023. Swiss companies can benefit from the well-trained, multilingual workforce.
- Renewable energies: The government has ambitious targets to increase the share of renewable energy and is promoting investment in solar and wind power.
- Outsourcing and production: With low wages and daily flights to Switzerland, Kosovo is a potential location for nearshoring.
Future challenges
The political tensions with Serbia, a ban on Serbian goods and weaknesses in the judicial system could affect the willingness to invest in the short term. Nevertheless, Kosovo’s rapprochement with the EU offers long-term prospects thanks to visa liberalisation and trade agreements.
Conclusion
Kosovo is an emerging market with potential for Swiss companies, particularly in the areas of technology, renewable energies and outsourcing. The ongoing integration into the EU and the stable economic environment create confidence, even if there are structural challenges.
Sources:
- Economic Report 2023 of the Swiss Embassy in Kosovo .
- International Monetary Fund (IMF) and World Bank: Statistics on Kosovo .
- Trade data Switzerland-Kosovo: Federal Office for Customs and Border Security .
- Accessible via this link.