Economy


	UNMIK
PROVISIONAL INSTITUTIONS OF SELF-GOVERNMENT	INSTITUCIONET E PËRKOHSHMVE VETQEVERISËSE	PRIVREMENE INSTITUCIJE SAMOUPRAVLJANJA
Ministry of Environment and Spatial Planning	Ministria e Ambientit dhe Planifikimit Hapësinor	Ministarstvo Sredine i Prostornog Planiranja

Economy

4.1.

Overview

Kosovo’s economy under the Yugoslav regime was run under a socialist type system of public, private and social ownership.

Although prewar statistics on the economy are incomplete and unreliable, they paint a picture of an economy that was already in serious decline. Per capita GDP was estimated to be low even by the standards of southeast Europe, and unemployment was very high, particularly among the disenfranchised ethnic Albanian majority. Low-productivity agriculture accounted for about 30 percent of output and the dominant means of employment. Mining and metals processing were other important activities, but they were starved of investment, and production techniques were outdated. More generally, Kosovo’s infrastructure was showing the signs of serious neglect and under investment.

The economy had also yet to embark on transition to a market economy. Although agricultural land was for the most part privately owned, industry was state or socially owned (the Yugoslav form of worker ownership). Jobs in the public sector, including key jobs in the industrial sector, were typically reserved for the ethnic Serbian minority, which made up only about one-tenth of the population of roughly 2 million. The majority ethnic Albanians, meanwhile, engaged in extensive gray economy activities and operated separate health, education, and social benefit systems funded through parallel taxes and remittances from the Diaspora

Source: Kosovo

Macroeconomic Issues and Fiscal Sustainability

International Monetary Fund

2001

4.2.

Current Macroeconomic indicators

The GDP per capita is though to have Increase from 941 USD in 2001 was in 1051 USD in 2002, (2.7 milliard of Euro). The trade balance of Kosovo is reported to as well as deficit in the trade balance of 1.7 milliard Euro. In 2001(Source: Ministry of Economy and Fiance, Sector of Macro economy 2002).

The economy of Kosovo after the 1999 conflict has relied on Donor assistance to restart its economy. As shown in chart 6 this reliance is diminishing as GDP and revenue collection are on the rise.

Chart 6: Kosovo GDP and Foreign Aid

Source: Kosovo Donor Meeting, November 2002, Ministry of Finance and Economy- Kosovo

4: Macroeconomic Projections


	2000	2001	2002	2003	2004	2005
GDP, million euro	1,414	1,747	1,990	2,163	2,339	2,530
GDP nominal growth rate, %		23.5	14.0	8.7	8.2	8.1
GDP real growth rate, %		11.0	7.0	4.5	4.5	5.5
Inflation rate, %		11.3	6.5	4.0	3.5	2.5
Foreign aid: PIP, humanitarian assistance, budget grants and imputed services provided by donors, million euro	1,336	1,290	1,032	794	528	386
ForAid/GDP, %	94	74	52	37	23	15
Source:

Source: Kosovo Donor Meeting, November 2002, Ministry Of Finance and Economy- Kosovo

4.3.

Unemployment

Kosovo suffers endemic unemployment. Unemployment was felt particularly in the Albanian community when discriminatory policies pushed them out of public and social sector jobs in the 1990s. Following the 1999 conflict, despite a growing economy, the unemployment rates remains one of the highest in Europe. In 2001 the unemployment rate in Kosovo was 57, 1%, according to surveys by Statistical Institute of Kosovo, while the Reinvest Institute puts that number at 49%.

6:Unemployment Rate

Table 5: Unemployment Rate

Year	% Unemployment	Total
1988	25.8%	133,715
1989	26.2%	138,983
1990	26.6%	147,995
1991	26.4%	133,148
1992	27.5%	109,041
1993	30.7%	86,598
1994	34.8%	82,031
1995	39.1%	93,325
1996	43.2%	104,578
2001	49.0%

Source; Statistical data for background purposes of OECD review COUNTRY: KOSOVA December 2000 (2001 data from Reinvest)

: Kosovo and European Unemployment rates

(Source: working trade and unemployment rate in Kosovo, Reinvest, Pristine, January 2003)

Unemployment rate for women in Kosovo is much higher than for the men (63.6% for women while 40.8% for men). This occurrence is same with other countries in transition (Source: working trade and unemployment rate in Kosovo, Reinvest, Pristine, January 2003)

4.4.

The economy by sector Economic Sector

‘Social production’ can be used as an indicator of the economic in Kosovo table 5 shows some major shift in the economy over the past 20-30 years. The most import trend has been the slow down of the mining and industrial sector during the 1990s. Though no precise data is available for the period 1999 and beyond, it is quite clear that the mining and industrial sector have come to near halt. Though efforts and being made by the authorities though the Kosovo Trust Agency (KTA) to privatize some of the industries, this process has only began.

Table 6 Trends of social production

	%
	1979	1989	1995
Social Production	100,0	100,0	100,0
Industry and mineralogy	37.6	52.9	30.6
Agriculture	19.8	21.9	29.6
Forestry	0.7	0.5	1
Hydro economy	0.2	0.5	0.7
Construction	11.8	5.8	5.7
Traffic and communication	5.8	3.8	8.5
Trade	16.8	7.9	13.8
Hotelier and Tourism	2.1	1.5	4
Handicraft	3.1	2.9	3.3
Municipal activities	0.8	0.8	1.3
Other activities	1.3	1.6	1.5

Source: Economic chamber of Kosovo, October 1999

Figure 8;Trends of social production

Source: Economic chamber of Kosovo, October 1999

4.5.

Impact of the Economy in the Environment

Though the industrial sector in Kosovo has been mostly stagnant since the 1999 conflict, it is still suffering the consequence for the neglect of the old inoperative industrial complexes. Also a boom in the private sector has resulted in the appearance of smaller but numerous private polluters engaged in smaller activities such as quarrying or pumps stations.

Historically Kosovo’s economy was concentrated in extractive industry, production of non-final materials, semi-final agricultural products. Heavy industries in Kosovo were (and still are) largely state-own enterprises. The fact that theses large conglomerate have been mainly inoperative has meant that the level of pollution discharge is limited. Nonetheless the large coal based thermo-central near Prishtina/Pristina continues to produce a heavy pollution load. There also remains a legacy from polluted areas or hotspots in and around the nonfunctioning major industrial complexes; badly stored hazardous material and leachate of old mining dumps are one of many examples

As and when the industries will start operating it is feared that unless environmental concerns are taken into consideration, further degradation will be inevitable.

GDP, million euro