Abstract
This paper intends to analyse the impact of global economic crisis on the economy of Kosovo with the focus on the impact of crisis on financial system of the country. For the purpose of analysing the global crisis impact on specific sectors of the economy of Kosovo, this paper begins by explain the roots of the global crisis, and the impact of the crisis in the region of Western Balkan by identifying and analysing fluctuations of major macroeconomic indicator of the economy, which is the GDP of Kosovo and Western Balkan countries for comparative analysis. In this regard the paper furthermore analyses the trends of macroeconomics indicators that reflect the development and macroeconomic balances of Kosovo economy in period of 2007- 2012, such as GDP, Trade Balance, CPI, Unemployment Rates, Remittances, and FDI. Furthermore, specifically analysis the reflection of global crisis in financial system by analysing the main developments of banking sector and pensions fond as major pillars of financial system .Additionally this paper by considering reports, academic journals, and different studies in view of economic development of Kosovo during the global economic crisis, presents applied fiscal policies of government during that period and the respond of financial system itself toward crisis. DOI: 10.5901/ajis.2016.v5n3p163
Highlights
Introduction and BackgroundThe existing world open economy has been hugely affected by the last financial crisis triggered by “Housing Bubble” of financial institutions in Wall Street in 2007
Advanced economy indisputably have been impacted by the global financial crisis, in many developing countries the crisis has manifested itself mainly in terms of trade and investment links, including a drop in commodity prices, exports, remittances and foreign direct investment (Koro, 2009).Kosovo with an emerging economy is still consider to be the poorest country in Europe, but just like most of Western Balkan countries(including; Albania, Bosnia and Herzegovina, Croatia, Kosovo, FYR Macedonia, Serbia and Montenegro) is characterized as a developing country that has relatively lower openness to world economy, with stable banking system that have been minimally affected by financial crisis (Pere and Hashorva, 2012)
Macroeconomic indicators shows that the global economic crisis of 2007 rooted in U.S have interrupted the positive trend of the development of the Western Balkan Countries, including Kosovo, by shrinking economic growth
Summary
The existing world open economy has been hugely affected by the last financial crisis triggered by “Housing Bubble” of financial institutions in Wall Street in 2007. World Advanced economies Euro area Major advanced economies (G7) European Union Emerging market and developing economies Central and eastern Europe Developing Asia ASEAN-5 Latin America and the Caribbean Middle East and North Africa Sub-Saharan Africa. This financial crisis has been manifested globally and due to high degree of integration the effect of recession emerged in real sectors of economies that are not directly affected by financial crisis (Thaci, 2012). The second section aims to explain the refection of global crisis to Kosovo financial system, particular in banking system, while in the third section, is conducted a quantitative analysis of Kosovo government policy and financial sector strategy in order to deal with the crisis and the paper’s brief conclusions are presented
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