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Kosovo has sustained steady growth, averaging 4.3% annually between 2010 and 2024. Even so, income per capita remains only 29% of the EU average, and just 33.8% of the working-age population was employed in 2024. The World Bank Group's Country Private Sector Diagnostic (CPSD), published in October 2026, examines this trajectory through the lens of an investor or entrepreneur. It spotlights where private investment remains unrealized and diagnoses the obstacles holding it back. The report translates this analysis into targeted policy recommendations aimed at attracting private capital and creating more and better-paid jobs.
Growth has leaned on remittances (12.8% of GDP) and on foreign investment concentrated in real estate, while goods exports remain small at less than 10% of GDP. Firms point to skills gaps, informality, limited access to finance and unreliable electricity as top barriers to growth, with nearly half experiencing power outages. Addressing these constraints, together with streamlining land and permitting processes, is identified as essential to sustaining momentum.
The report focuses on three sectors with high potential for private investment. In utility-scale solar and wind, competitive auctions, a liquidity guarantee mechanism and a regulatory framework for battery energy storage could mobilize up to US$1 billion in private investment and support about 8,300 jobs. They would also reduce reliance on coal, which generates roughly 90% of electricity. In business services, where IT and business process outsourcing exports quadrupled between 2021 and 2025, reforms to labor rules, data protection, financing for asset-light firms, and e-signatures could attract US$68–177 million in investment and generate 32,000–46,000 jobs. In manufacturing of building components, rising domestic construction and EU demand for energy-efficient buildings could draw US$187–296 million in investment and create 21,000–33,000 jobs if grid connection costs, land access, construction permitting and vocational training are addressed.
Across all three sectors, the CPSD ties concrete policy recommendations to specific constraints, making it a practical roadmap for both the government and investors. Together, reforms in these sectors could mobilize an estimated US$1.2–1.5 billion in private investment and create 61,000–87,000 direct and indirect jobs over the next 5-10 years.
