Kosovo is expected to remain among the stronger-performing economies in Central, Eastern and Southeastern Europe in 2027, with economic growth projected at 3.8%, according to the Vienna Institute for International Economic Studies (wiiw). The forecast comes as the region faces rising energy prices, geopolitical tensions and growing pressure to transform its traditional economic model.
In its Autumn Forecast, published on October 21, 2026, wiiw said most economies in the region had demonstrated resilience despite renewed global uncertainty, with several Western Balkan countries performing better than previously expected.
Kosovo’s projected growth rate of 3.8% in 2027 places it among the region’s stronger performers, ahead of Albania, which is forecast to grow by 3.7%. Kazakhstan is expected to record the highest growth among the countries highlighted in the report, at 4.7%.
Kosovo faces opportunities amid regional economic changes
The report points to a changing economic landscape across Central, Eastern and Southeastern Europe, where growth is increasingly driven by domestic demand, investment, automation and higher-value manufacturing rather than the traditional reliance on low labour costs, foreign investment and demand from German industry.
For Kosovo, the regional outlook highlights the importance of strengthening investment, improving productivity and diversifying economic activity to sustain growth amid an increasingly uncertain international environment.
The broader Western Balkans region has shown greater resilience than expected, prompting wiiw to upgrade its growth forecasts for most economies in the region.
However, the report also warns that rising energy costs, inflationary pressures and tighter public finances could weigh on economic performance.
Higher energy prices remain a risk
The global economic outlook has become more challenging as geopolitical tensions and disruptions in the Strait of Hormuz have pushed up energy and commodity prices. Russia’s ongoing war against Ukraine, higher U.S. tariffs and growing trade tensions between the European Union and China are adding to uncertainty.
Wiiw has revised its inflation forecasts for the region upward by an average of 0.2 percentage points for 2027. Central banks have generally paused interest-rate cuts, while some have raised rates.
Persistently high natural gas prices could put additional pressure on household budgets and businesses. Slower real wage growth may also moderate private consumption, which remains an important driver of economic activity across the region.
These developments underline the importance of energy security and economic resilience for Kosovo and other Western Balkan economies.
Investment and productivity key to future growth
According to wiiw, investment will play an increasingly important role in determining the region’s economic prospects. European Union funding, higher defence expenditure and the need for businesses to modernise and automate could create opportunities for growth.
At the same time, governments across the region face fiscal constraints, including budget deficits, higher borrowing costs and rising debt-servicing expenses.
The institute argues that countries best positioned to succeed will be those capable of attracting investment, raising productivity and moving toward higher-value economic activities.
For Kosovo, the projected 3.8% growth rate offers a positive outlook for 2027, although the forecast does not eliminate the risks associated with inflation, energy prices and the wider geopolitical environment.
The report’s broader message is that sustained growth will increasingly depend on countries’ ability to adapt to changing economic conditions, strengthen productive capacity and manage external risks.
