LONDON, United Kingdom — The COVID-19 pandemic hit Kosovo like any other Balkan country. As a prompt response, the country closed its borders and implied a lockdown. In May 2020, life started to resume. However, the second wave of cases lowered the level of enjoyment of daily life.
In general, COVID-19 affected poverty in Kosovo sharply. According to the country report of the BTI project, in 2018, the rate of people living under the official poverty line was 30%. On the other hand, in 2022, this rate rose to 40% due to the COVID-19 pandemic due to several reasons, such as the closure of the country’s borders, the government’s measures to curb the spread of the virus, suspension of private business operations and job losses related to it.
COVID-19 struck employment in Kosovo directly. In a short span of time, in other words, from January 2020 to April 2020, the unemployment rate in Kosovo rose from 25.90% to 29.10% due to the quick response of the local authorities to the pandemic, which reflected in the closure of all non-essential business. The hospitality sector was the first and foremost affected source of income in Kosovo during the course of the COVID-19 pandemic. Before the pandemic, the hospitality industry occupied with 19% the largest share of the economic activity of Kosovars. However, as a consequence of the pandemic, it dropped to third place with 11%.
Although those in self-employment have been one of the most vulnerable groups during the COVID-19 pandemic, there is now little progress in their business activities. To start with, prior to the pandemic, only 3% of business owners evaluated their financial performance as poor and 2% of them as very poor, according to the UNDP report. The restrictions on businesses led to a dramatic drop in the economic performance of the self-employed population. However, over time business owners started to recover their losses. Numbers demonstrate the situation precisely. In November 2020, 43% of self-employed Kosovars evaluated their performance as very poor and 39% of them as poor. In contrast, only after five months, in March 2021, these rates dropped to 28% and 36%, respectively, the same report shows.
Recovery Process in Kosovo
The country’s economy is recovering gradually because there are no more restrictions on mobility and business-doing in Kosovo related to COVID-19. In addition to the drop in economic losses of the business owners, there is a significant rise in profit as well. According to the UNDP report, from November 2020 to April 2021 the rate of those who described their financial performance as good scaled up from 7% to 16%.
Another good news is that as a result of foreign aid programs which also led to the recovery of businesses after the outbreak, in March 2021, just one year later after confirming the first COVID-19 case in the country, the unemployment rate in Kosovo had already dropped to the pre-pandemic level, to 25.80%, according to CEIC. Moreover, in December 2021, the unemployment rate in Kosovo dropped to 20.7%, the lowest unemployment rate in the country’s history.
In terms of foreign aid programs, EU institutions mostly fund the economic recovery of Kosovo. In June 2021, the European Investment Bank pledged €40 million to recover the economy and tackle the impact of COVID-19 on poverty in Kosovo. Additionally, in September 2022, the European Commission contributed €5.25 million as support to small businesses in Kosovo.
Apart from the EU institutions, USAID also announced for Kosovo a COVID-19 response package of $2.5 million in November 2021 and an additional $3 million in January 2022.
With support from other countries and aid programs, the impact of COVID-19 on poverty in Kosovo could be off the table. However, more aid is necessary to downsize poverty in the country.
– Murathan Arslancan
Photo: Wikimedia Commons