Net foreign direct investment (FDI) into Kosovo reached €514m ($548m) in the first eight months of 2023, the country’s state bank has said.

According to the Central Bank of the Republic of Kosovo, FDI inflows rose 0.7% compared to the same period last year (€510m), while FDI outflows hit €145m compared to the €109m recorded between January and August 2022.

In August alone, Germany invested the highest FDI amount of all countries (€17.3m) followed by Switzerland (€16.7m). In addition, Kosovo’s state bank reported that total investments in Kosovo, including deposits, loans, and commercial loans, amounted to €152m by the end of August 2023. This is around €110m lower compared to the same period in 2022.

Overall net FDI has been on the rise ever since Covid, going up from $382m in 2020 to $466m in 2021. The US Department of State said last year: “Kosovo has the potential to attract FDI”, but the government in Pristina continues to face economic challenges due to limited global integration caused by its partial recognition as a state. As of Sep 2020, only 102 of 193 UN member states recognized Kosovo.

“Despite the challenges, Kosovo has attracted a number of significant investors, including several international firms and US franchises,” the Kosovo report published by the US Department of State reads. “Some investors are attracted by Kosovo’s relatively young population, low labour costs, relative proximity to the EU market, and natural resources.”

“Global supply disruptions brought on by the Covid-19 pandemic have sparked greater interest recently from some businesses to utilize Kosovo as a base for near-shoring production destined for the EU market. Kosovo does provide preferential access for products to enter the EU market through a Stabilization and Association Agreement (SAA).”

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