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Inflation Trends across Eurozone

According to Mallik and Chowdhury (2001), inflation refers to the long-term increase in price for commodities within an economy as a result of devaluation of the economy’s currency. Inflation marks a reduction in purchasing power of money; high inflation rates would mean that each unit of currency is likely to buy fewer commodities. The primary cause of inflation is the increase in money supply which is not consistent with the economic growth. Other inflation causes include; increased national debt, increased consumer demand, exposure to foreign markets and increased cost of production. This paper seeks to discuss the Kosovo’s inflation trends and how the current deflationary trends in the Eurozone and other developed economies have been reflected in Kosovo. The Kosovo’s economy has experienced positive growth over the years, and the inflation rates within the country have dropped consistently over the past years.

Inflation trends

Despite having more than a decade of political instability and uncertainty, the country of Kosovo has made a considerable effort towards becoming a sovereign economy in the Eurozone. The country has continuously experienced a positive economic growth over the past few years. Notably, the country has recorded an average Gross domestic product (GDP) of 3.3 % over the five years despite the Eurozone crisis. To improve the economy further, the country has made a continuous move towards becoming a market-oriented economy. Additionally, the government has also made substantial efforts to improve the investment climate of the country by reforming the legal environment and frameworks to attract and at the same time retain foreign investments…

 

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