The impact of COVID-19 pandemic on Kosovos economy
2020-10-29 - 08:32
The GAP Institute has published a comprehensive report on the impact of measures around Covid-19 on the country's economy in the first half of 2020. This report, presents the main components that make up the GDP, as well as other macroeconomic indicators in the first half of 2020 (January-June) in order to reflect the impact of this crisis on the country’s economic sectors. The following are the key findings of the report:
• In the first half of the year, domestic spending underwent significant changes. Household consumption focused mainly on basic products, such as food and utilities (water and electricity), while businesses spent more on digitizing services to operate during the pandemic.
• Economic activities that performed best include: extractive industries, manufacturing, electricity and water supply, which grew by 19.8 percent in the second quarter, and information and communication by 29.6.
• Meanwhile, there was a decline in revenues in all other industries. The biggest drop was in the construction industry, with -47.08 percent, and trade, transport, accommodation and food service activities, with -24.4 percent.
• During the first six months of the year, industries reported a turnover of around 584 million Euros, which is 11 percent less than in the same period the previous year, in the Tax Administration of Kosovo (TAK).
• On the other hand, to ease the financial burden after the restrictive measures were introduced, the Central Bank of Kosovo (CBK) and the credit institutions offered the possibility of deferring loan repayments for three months, as well as the possibility of applying for loan restructuring.
• The Government of Kosovo approved the first “fiscal emergency” package worth 190 million Euro, and proposed diverting certain budget expenditures from capital expenditures to salaries, transfers and subsidies. However, this package could not be fully implemented in the second quarter and, as a result, many citizens and businesses failed to receive the assistance in time.
• Public spending in 2020 increased by 18.8 million Euro, around 2 percent, compared to the first half of 2019. Meanwhile, budget revenues decreased in all categories. The fall in budget revenues is linked with poor private sector performance and a declining aggregate demand.
• This period was also accompanied by a fall in new loans and an increase in bank deposits, reaching a record value of close to 4 billion Euros. These two phenomena reflect a decline in the total demand in the first six months.
• Other aspects that contracted the economy in the first six months of the year included a decline in the export of services, particularly transportation, which is connected with the restriction of cross-border traffic and the non-arrival of the diaspora.
To access the Report, click HERE
