Department of Macroeconomics uses data published by relevant institutions. All data sources are put at the bottom of this publication.
Macroeconomic Projections No.08, January – March 2012
Based on the trend of Gross Domestic Product (GDP) components, Kosovo's economy for 2011 is estimated to have grown at an annual rate of 5.3%. Meanwhile, predictions for 2012, by taking into account the regional developments and developments in the euro area; indicate an annual increase of 4.4%.
During 2012, total consumption is expected to be the main contributor to the GDP growth, contributing 2.4% to the growth. Private consumption is projected to contribute 2.1% toward real growth.
During 2012, total investments (public and private) are expected to be an important factor of economic growth. Total investments are expected to contribute approximately 2.3% to the annual GDP growth.
Exports of goods and services are expected to contribute approximately 1.3%, while imports of goods and services are projected to continue with a negative contribution to the economic growth by approximately -1.7%.
During 2011, the average annual growth rate of the Consumer Price Index (CPI) reached 7.3% from 3.5% in 2010. During 2012, CPI is expected to be around 1.2%.
Real Sector
The overall prices as measured by the Consumer Price Index (CPI) continued with a downward trend in the first quarter of 2012. On average, the CPI marked an increase of 1.7% in the first quarter of 2012, a figure which was recorded to be 9.2% in the same period of 2011.
As seen on the graph, after a significant increase in the overall price level in the first half of 2011, prices in the second half of the year started to fall by reaching an annual change of 0.6% in March 2012. This value presents the lowest increase during the past two years.
The main factors in the overall price increase over the first quarter of 2012 seems to be oil and gasoline, whereas a price decrease is noted on the bread and cereals
As a result of developments in commodity prices throughout the global markets, the latest forecasts for the overall level of world prices point to a general stabilization of prices. Food prices are expected to be the key drivers of price volatility over the projected period given the significant impact of these goods on the domestic consumer basket. Nevertheless, as a result of price stabilization of these products, these developments are expected to reflect the price level of the domestic market
Given the geo-political developments in the Middle East and beyond, the oil and gasoline price volatility is expected to be an additional important factor in determining the domestic price level during the year.
As a result of these events and developments in the domestic market, the domestic prices during 2012 are expected to increase by an average of 1.2% in comparison to 2011
Foreign Sector
The level of exports and imports in the first quarter of 2012 was lower compared to the same period of last year; however, the trade balance did not mark any improvements because exports of goods noted a larger decline in relation to imports.
This decline in foreign trade is mainly attributed to the unfavourable weather conditions that made the road traffic more difficult, thus February marked the sharpest fall, for both imports and exports, in this quarter.
The value of exported goods at the end of the first quarter of 2012 amounted € 58.2 million, a figure which is lower for approximately € 17 million than the one on the same period of last year.
As in previous years, base metals were the main exported products, followed by mineral products, foodstuff, plastics and wood, machinery and electrical equipment.
Furthermore, the main trade partners remain the same as in the previous periods, leaving the EU countries the main destination for products of Kosovo.
Imports of goods were also on a lower level than the same period of last year; however, imports seem to recover faster than exports.
The nominal value of imports at the end of the first quarter of 2012 amounted € 457.6 million, a figure which represents a decline of approximately 3% compared to the same period of last year.
Mineral products (a category that includes oil imports) is the main imported category, followed by Prepared Food, Beverages and Tobacco.
As a result of slower growth in exports, the negative trade balance remained at the same level as in the previous year.
Fiscal Sector
The total revenues at the end of 2012 first quarter reached an amount of € 287.2 million, representing approximately 20% implementation of the annual plan.
As a result of lower imports, mainly caused by unfavourable weather conditions, customs revenues resulted to be lower than in the same period of last year
Customs Revenues at the end of the first quarter of the year amounted € 142.5 million, a figure which is about 4% lower in comparison to the one of the same period of last year.
On the other hand, revenues from Local Taxes recorded an increase of about 9% compared to last year reaching an amount of approximately € 64.7 million at the end of the first quarter of 2012. This figure represents 22% implementation of the annual plan.
Government total expenditure at the end of March reached an amount of € 286.7 million, marking an increase of approximately € 111.4 million compared to the quarter of the previous year.
The capital expenditure rose to about € 75 million, compared to the same period of last year, such expenditure were mainly addressed for infrastructure improvements and construction of Merdare- Morinë highway
Current expenses also noted an increase of about 42% as a result of increase on the category of salaries and daily wages, thus
after increasing salaries for certain categories of civil servants.
This significant rise in government spending compared to last year resulted due to the non-approval of 2011 annual budget in time and that in the first quarter of 2011, the Government of the Republic of Kosovo, in accordance with the budget law of 2011 operated with 1/12 of 2011 budget.
Financial Sector
At the end of March 2012, Total Assets of banking sector amounted € 2.6 billion, a figure which represents an increase of 6.8% compared to the same period of 2011
The total of deposits in the banking sector by the end of March amounted approximately € 2.1 billion, reaching an annual increase of 8.7%
Loans amounted € 1.7 billion at the end of March 2012, marking an annual increase of 13.5%. Approximately 66.5% of these loans were addressed to non-financial corporations whereas the rest to the household. The sectors which have mostly taken loans are the following: sector of services, energy, industry and construction The average interest rates on loans was 13.8% for March, 2012, while the interest rate on deposits was 3.33%.
Table 1.
Main Economic and Fiscal Aggregates
Sources:
Real Sector: Statistical Office of Kosovo http://www.ks-gov.net/esk/
Fiscal Sector: Department of Treasury, ME http://www.mef-rks.org/
Financial Sector and External Sector: Central Bank of Kosovo: http://www.bqk-kos.org/
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