The very high trade deficit is one of the main characteristics of the external sector of Kosovo’s economy, which is a similar characteristic that can be found in many developing countries and transition economies.
This paper aims to examine the empirical data regarding the performance of the trade balance of the Republic of Kosovo for a period of seven years, and in turn analyze the field of current transfers, which has historically been the main source of coverage of high trade deficit. In the current account balance of payments two main items are identified: the trade balance and current transfers. The first item shows the deficit and the other one shows the surplus on billions euros. The interest in this study arises from compensatory relation that these two items have. In the first part of this paper the literature review about the trade deficit, trends and trade balance of Kosovo is analyzed; in the second part the unilateral current transfer item is analyzed, with particular emphasis on private transfers and remittances, whereas in the third part the legitimacy of these two items is confronted, the compensation amount and the consequences.
Current Transfers as the Main Source for Covering Trade Deficit –The Case of Kosovo (793.2 KiB, 163 hits)