KOSOVO ON THE ROUTE TO MARKET ECONOMY
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KOSOVO ON THE ROUTE TO MARKET ECONOMY
Authors:
Domadenik PolonaMulaj IsaRedek Tjaša
17 November 8th Portorož Business Conference
Weak economic dynamics
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2501 2488
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2001 2002 2003 2004 2005
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GDP in million € (2002 prices) Economic growth
17 November 8th Portorož Business Conference
Dependency on foreign assistance
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2001 2002 2003 2004 2005
GDP in million € (2002 prices) Donations
17 November 8th Portorož Business Conference
Future economic development
Despite numerous problems…1. Political situation and undefined status
2. Numerous problems in the process of economic transition: building own institutional system, slow restructuring, slow privatization
3. Often unclearly defined property rights, specially in the public sector
4. Poor legal system
5. Destruction due to war
6. Undeveloped financial system…
….Kosovo has development potential:1. Resource rich economy
2. Young population eager to work and learn
INDUSTRIAL STRUCTURE OF
KOSOVO ECONOMY
Authors:Polona DomadenikTjaša RedekBesnik BerishaMentor PllanaRiad RashitiArtan Sadiku
17 November 8th Portorož Business Conference
Insurance sector
Insurance sector relatively underdeveloped Mainly car insurance Life insurance market expanding fast (2002 395 policies, in
2005 25 296 policies)
17 November 8th Portorož Business Conference
Banking sector
Banking most developed financial serviceImportance of foreign banks
Increased competitionIncreased confidence
…and lowering the interest spread, which is very high (12) and contributes to slower economic activity
otherPCB
Reiffeisen
17 November 8th Portorož Business Conference
Construction sectorStrong activity after the war due to reconstruction…
* Category 3: up to 30% damage to the roof, category 4: over 30% damage, category 5: completely destroyed.
But several problems exist: lack of capital, low profits, lack of electricity, too much government interference, bureauctratic delays …
Housing Reconstruction Funded by International Donors, 1999-2002
6568
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5828
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1999 2000 2001 2002 Remaining
Category 3 & 4 Category 5
ERA’S ENTRY INTO THE KOSOVO MARKET
Authors:
Irena VidaJožica KomacVladka McLaughin LadmanovaJelena Rakić
17 November 8th Portorož Business Conference
ERA in KOSOVO
Growth Rates in Retail Trade (in %)
First quarter
2004
Second Quarter 2004
Third Quarter
2004
Fourth Quarter 2004
First quarter
2005
Second Quarter 2005
Average EU-25 3 3,1 2,8 2,5 2 1,7
Albania 29,9 30,5 8,6 8,3 -2,1 -15,3
Bosnia and Herzegovina
22,8 42,4 45,5 40,4 48,5 50
Croatia 10,5 8,3 9,3 8,9 3,1 6,7
Macedonia 5,3 3,8 4,5 6,6 5,3 14,7
Serbia and Montenegro (including Kosovo)
17,6 22,6 33,7 38,1 49,4 59,4
But the market is still immature… 60% of income is spent on food.
Source: Eurostat STS and National Statistical Institutes in Behrens, 2006, p. 6
17 November 8th Portorož Business Conference
Shopping in Various Retail Formats
Source: Consumer Survey in Kosovo (1), 2006.
14,17%
46,50%
27,83%
46,74%
16,50%
7,67%
33,33%
64,94%
0,00% 20,00% 40,00% 60,00% 80,00%
Open market
Small shops
Supermarkets
Hypermarkets
Shopping for Everyday Goods Shopping for Household Goods
Consumers were allowed to choose more than one answer.
17 November 8th Portorož Business Conference
Characteristics of the shoppers
Source: Consumer Survey in Kosovo (1), 2006.
Hypermarket Supermarket Small Stores
Up to 35 years old 70% 55% 59%
College degree or more 47% 29% 34%
Monthly family income above €450 45% 24% 34%
Monthly spending for household goods exceed €150
62% 36% 53%
Spend more than €8 per average small purchase
48% 37% 22%
Spend more than €80 per average large purchase
39% 23% 14%