The Central Bank of the Republic of Kosovo has announced that the Kosovo economy experienced an acceleration in real GDP growth, reaching 5.4 percent in the first quarter of 2026 compared to the same period last year. This growth was mainly driven by improvements in the net export balance and an increase in public consumption.

According to the CBK report titled "Quarterly Assessment of the Economy," investments continued to have a positive impact, although at a more moderate pace. The rise in exports of goods and services, combined with a slowdown in imports, contributed to the enhancement of the trade balance.

In contrast to the previous quarter, where private consumption and investments were the main growth drivers, private consumption contracted in Q1 2026. This decline was attributed to the effects of inflation and a reduction in consumption financing. However, the increase in government consumption helped offset the weakening of domestic demand.

The report also revealed that inflation in Q1 2026 accelerated to 6.0 percent, up from 5.2 percent in the previous quarter. This increase was primarily due to rising prices for services and energy, while food price increases moderated. Core inflation also showed an upward trend, reaching 5.1 percent, mainly driven by service prices. Overall, inflationary trends were largely influenced by domestic factors, although external influences, particularly oil and food prices, had a limited impact.

During the first quarter of 2026, Kosovo's fiscal sector saw an increase in revenues of 9.9 percent and a rise in budget expenditures of 13.8 percent, resulting in a primary surplus of 21.4 million euros. The increase in revenues, which reached 780.1 million euros, was largely driven by strong VAT and direct tax performance. Meanwhile, expenditures were boosted by public sector wages, along with the categories of subsidies and transfers. However, capital investments decreased by 29.6 percent, indicating a slowdown in the implementation of public projects.