Import tariffs fail to stop Kosovo's trade gap widening

Import tariffs fail to stop Kosovo's trade gap widening
By bne IntelliNews May 27, 2019

Kosovo’s trade deficit widened by 8.1% y/y to €893.8mn in the first four months of 2019, data from Kosovo's statistics agency KAS indicated.

The huge trade gap is one of the biggest problems for the Kosovan economy.

It continued to widen in the opening months of 2019 despite punitive, politically motivated tariffs imposed on two of Kosovo’s neighbours Serbia — Kosovo’s top trading partner in April last year — and Bosnia & Herzegovina. 

A study by the GAP Institute for Advanced Studies, a Kosovan think tank, despite the fall in imports from Serbia and Bosnia, due to the imposition of the 100% import tariffs, Kosovo's trade deficit is still huge, which means that local producers have failed to benefit from the taxes. 

The KAS data shows that the value of imports from Serbia slumped from €37.0mn in April 2018 to just €637,000 in April 2018. Meanwhile, imports from Bosnia fell from €6.6mn in April 2018 to €71,000 a year later. 

At the same time, imports from Greece more than doubled y/y in April, while there were also sharp increases in imports from several states in particular Greece, Albania, Germany, Turkey and North Macedonia. 

GAP’s study noted the possibility that exporters from Bosnia and Serbia could be routing their products via neighbouring countries to avoid the tariffs. 

Overall, Kosovo’s exports grew 15.3% y/y to €114mn in the first four months of 2019, while imports went up 8.8% y/y to over €1bn, data showed on May 24.

In April, Kosovo posted a trade deficit of €258.5mn, up 5.6% y/y, as exports grew by 44.7% y/y to €36.9mn while imports rose 9.3% y/y to €295.4mn.

Kosovo’s export base remains weak, consisting mainly of base metal and articles of base metal, mineral products as well as plastics and rubber.

Kosovo imported mainly of mineral products, machinery, base metals and prepared foodstuffs.

In April, Kosovo's exports to EU countries amounted to €12.3mn, or 33.4% of total exports, a 51.9% increase. The main export partners for goods within the EU were Italy, Germany, the Netherlands, Slovenia and the UK.

Kosovo's imports from EU countries were €156.3mn, or 52.9% of total imports, a 35.4% increase. The highest share of imports were from Germany, Greece, Italy and Slovenia.

In 2018, Kosovo’s trade deficit widened by 11.3% y/y to €2.97bn.