Banks expect lending standards to further tighten in early 2017

Banks expect lending standards to further tighten in early 2017

TIRANA, Jan. 19 – Banks tightened lending standards for businesses in the final quarter of 2016 and do not expect to considerably ease them in the first three months of this year, a survey by the country’s central bank has

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Experts unveil economic risks associated with upcoming June elections

Experts unveil economic risks associated with upcoming June elections

TIRANA, Jan. 19 – Economy experts says the Albanian economy faces increased challenges for 2017 when the upcoming general elections will be a chance to either continue the tradition of putting at risk fiscal consolidation or put an end to

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Albania, Kosovo to establish joint Durres customs point

Albania, Kosovo to establish joint Durres customs point

TIRANA, Jan. 19 – Albania and Kosovo are working to set up a joint customs point at Durres Port to further ease trade exchanges between the two countries after the upward trend came to an end in 2016 with a

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Albania needs to continue fiscal consolidation, EU report says

Albania needs to continue fiscal consolidation, EU report says

TIRANA, Jan. 19 – Albania is expected to register one of the highest growth rates among regional EU aspirants in the next couple of years, but needs to continue its fiscal consolidation efforts and bring down public debt as it

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Albanians to pay twice for crossing Highway of Nation

Albanians to pay twice for crossing Highway of Nation

TIRANA, Jan. 18 – Albanians are expected to pay twice for crossing the Highway of Nation linking Albania to Kosovo, directly through the average €5 toll the concessionaire will collect and indirectly through taxpayer money in government subsidies for traffic

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Exports overcome contraction with modest 0.1% pickup for 2016

Exports overcome contraction with modest 0.1% pickup for 2016

TIRANA, Jan, 17 – Fuelled by the resumption of electricity sales and a pickup in commodity prices in late 2016, Albania’s exports registered a turning point last December ending 2016 with a growth rate just slightly above zero following a

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World Economic Forum: Albania fails to make economic growth more inclusive

World Economic Forum: Albania fails to make economic growth more inclusive

TIRANA, Jan. 17 – Albania has had one of the region’s highest growth rates in the aftermath of the global financial crisis in 2008, but when it comes to inclusive growth it stands in the middle of 79 developing countries,

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Lek loses ground against Euro, U.S. dollar

Lek loses ground against Euro, U.S. dollar

TIRANA, Jan. 16 – Europe’s single currency has gained a slight advantage against Albania’s national currency in the first two weeks of January after hitting a six-year low last December when it fell as low as 134.4 lek, with a

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Albania has high untapped solar, wind energy potential, report shows

Albania has high untapped solar, wind energy potential, report shows

TIRANA, Jan. 16 – With domestic electricity generation currently wholly reliant on hydroelectricity, Albania has large untapped wind and solar energy potential that can be cost-competitive, UAE-based International Renewable Energy Agency (IRENA) has unveiled in a South East Europe report

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Economic, geopolitical risks top Albanians’ doing business concerns

Economic, geopolitical risks top Albanians’ doing business concerns

TIRANA, Jan. 16 – Economic and geopolitical risks top Albanians’ concern over doing business in their country in the next 10 years, according to a survey published by the World Economic Forum in its 2017 Global Risks Report. Fiscal crises,

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                    [post_content] => lendingTIRANA, Jan. 19 - Banks tightened lending standards for businesses in the final quarter of 2016 and do not expect to considerably ease them in the first three months of this year, a survey by the country's central bank has found.

The tighter standards comes as non-performing loans have embarked on an upward trend in the past few months reaching 20.44 percent last November, down from a record high of 25 percent in mid-2014, being a key barrier to credit which has been struggling to return to positive growth rates in the past year, also due to poor demand by businesses despite the easier monetary policy significantly cutting loan rates.

Banks’ profits dropped to about 6.5 billion lek (€46.8 mln) in the first three quarters of 2016 as non-performing loans rose to 21.3 percent.

Specific problems in the sector businesses operate, the high level of non-performing loans and the banks' perception on macroeconomic situation made lending standards tighter despite ample competition, liquidity and capital adequacy in the Albanian banking system.

Banks increased demand for collateral in the final quarter of 2016, something which made the loan application and approval process more difficult at a time when demand for new business loans remained almost unchanged, said the central bank.

"Banks expect lending standards to further tighten for big businesses in the first quarter of 2017 and slightly ease for small and medium-sized businesses. Demand for new loans is expected to pick up by both businesses and households," the Bank of Albania says in its survey.

Credit officially returned to positive growth rates in the third quarter of the year, overcoming a one-year period of contraction also affected by the write-off of non-performing loans from banks’ balance sheets artificially keeping credit at statistical negative growth rates.

The findings about lending standards and demand for new loans, contradict another central bank survey showing the business and consumer confidence continued recovering in the final quarter of 2016 when it climbed to 9.4 percentage points above its long-term historical average.

Confidence in the key services and construction sectors recovered in the final quarter of the year but slightly fell in the industry sector affected by the slump in commodity prices reducing the country's oil and mining exports. Confidence in the trade sector also slightly deteriorated but further improved among consumers, standing 3 percentage points above its historical average.

The Albanian economy is expected to face a tough start in 2017 after the country experienced the coldest winters in three decades, with heavy snowfall and icy weather paralyzing business in early January and severely damaging greenhouse crops.

However, a pickup in commodity prices is expected to reinvigorate oil and mineral exports which have been suffering since mid-2014 when international prices more than halved.
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                    [post_content] => TIRANA, Jan. 19 – Economy experts says the Albanian economy faces increased challenges for 2017 when the upcoming general elections will be a chance to either continue the tradition of putting at risk fiscal consolidation or put an end to this practice that has proved detrimental in the past 25 years of the country’s transition.

Expert Ardian Civici says past electoral years have shown the country’s economy suffers and many of its parameters are put at risk.

“The elections or electoral years’ experience in Albania is not positive for the economy. There are many studies showing there is strong correlation between electoral years and the level of economic growth in these years. Almost in every case, the economic growth strongly ‘fluctuates’ which identifies the elections' negative effects on the economic performance,” Civici has told Mapo newspaper in an interview.

“The reasons are related to budgetary misuses being made in the pre-election months to ‘launch’ as many investment and new projects that witness the government's success; the many fiscal changes disorienting businesses and consumers, fictitious employment in the public administration with a party and electoral character; extreme debate on economic policies and statements that everything will change after the elections, a phenomenon which considerably shakes the economy, investment and the business climate, putting the state and governance at the disposal of electoral campaigns and the high political conflictuality etc.,“ he adds.

“If in the upcoming elections, many of these phenomena will disappear or minimize, I think their impact will be less negative than previously, otherwise we will have to admit the fatality that electoral years are years which shock economic performance and require one or two extra years to stabilize it,” says Civici, a former member of the central bank’s supervisory board.

According to him, reducing poverty, promoting employment and improving the business environment are the main challenges.

“Reducing poverty for about 40 percent of the population living under conditions of relative poverty, promoting employment by creating quality jobs with average wages comparable to regional countries, bridging territorial and regional gaps within the country, improving the business climate which among others also implies lower fiscal pressure will be the main challenges for 2017,” says Civici.

“I believe that the public-private partnership policies if not clientelistic and electoral, the functioning of some important concessions in energy, infrastructure and services, the launch of some new FDI projects, the increase of domestic private investment can and should play a positive role in the 2017 economic developments,” he says.

Elvin Meka, another economy expert, also describes the upcoming June 18 general elections as a challenge for the Albanian economy, especially about producing inclusive growth which he says cannot be achieved with a GDP growth rate of less than 6 percent annually in Albania’s stage of development.

"2017 will be a specific year for the Albanian economy and this for reasons mainly related to internal and international developments. The focus is on the general elections and slightly less the election of the new president,” he says.

“As in previous years, the challenge for this year is achieving economic growth of above 3 percent, but producing welfare remains a challenge within itself. This has been and remains the most difficult part, not only for this year, but anytime, as this pace of growth below 6 percent is always problematic toward bringing welfare which means we can'have positive economic growth, but not an increase in welfare,” adds Meka.

“Electoral years are always complex and tough years for the Albanian economy and not only, both in achieving the targeted economic growth and putting in practice the government's fiscal program, mainly in achieving tax revenue, attracting foreign direct investment and domestic private investment,” he adds.

“Unavoidably, there could be high expectations on the execution of public investment, but private investment by Albanian businesses themselves remains vital for economic development. Beyond the sluggish economic environment that Albanian businesses have been operating since years, for objective and subjective reasons, they are expected to apply a kind of self-restraint at least during the first half of the year,” says Meka.

“Lack of essential fiscal policy changes means the private sector will continue to hesitate undertaking key investment, failing to produce a visible increase in employment and consumption. This fact is further reinforced by the reality of credit to the economy which continues to only modestly grow and the explanation to this is the lack of strong demand for credit by private enterprises,“ notes Meka.

Growth agenda

The economy experts say Albania has to change its current growth agenda focusing on low-value added services such as the garment and footwear sector, employing about 100,000 people, most of whom are paid at minimum wages.

“Albania has a lot to do both in establishing stable institutions and for the economic growth to be all-inclusive and sustainable, a more harmonized contribution is required by economy sectors in the GDP contribution seen from the point of view of debates on Albania's new ‘economic model’ for the next two decades and growth being supported by stronger industrial production, exports, innovation and new technology compared to the current situation when there are many factors contributing such as imports, low value-added services etc.,” says Civici.

Elvin Meka says political parties will first of all have to agree on a major fact that the country needs a consensual strategy for long-term economic development, beyond party militancy, partisan, ultraliberal and populist convictions.

"If we want to walk faster than the 3 to 4 percent growth rate, we have to become aware of the opportunities Albania has and the resources available, be serious with the establishment and functioning of public and private institutions and have efficient law-enforcement regulators and quit the 'swamp' model of a services economy without services (minimally distributing domestically produced products, but massively imported ones),” he says.
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                    [post_content] => TIRANA, Jan. 19 - Albania and Kosovo are working to set up a joint customs point at Durres Port to further ease trade exchanges between the two countries after the upward trend came to an end in 2016 with a 15 percent decline. The one-stop shop means Kosovo enterprises using Albania's Durres Port will no longer have to undergo new inspections at the Albania-Kosovo border crossing points.

"In cooperation with the Kosovo customs, the Albanian customs have undertaken a joint project on the opening of the Kosovo customs operation office at the Durres customs branch. By February 15, technical staff from both the Albanian and Kosovo customs will finalize the technical, procedural and legal issues for the opening of the customs office and we will determine the customs opening during a visit I will pay to Prishtina by February 20," Albanian Finance Minister Arben Ahmetaj told his Kosovo counterpart Avdullah Hoti. The comments came during a visit the Kosovo minister paid to Tirana this week as Albania signed a deal to get expertise from Kosovo on its fiscal cadaster project and plans to apply a new property tax.

Albania and Kosovo have held three joint government meetings in the past three years in a bid to boost cooperation with a focus on the economy, but trade disputes continue hampering the expected boost in trade exchanges, which remain significantly below their potential despite the Highway of Nation having considerably cut the distance between the two countries.

The two countries still don't recognize certificates of origin used by exporting companies.

"I believe that in the Prishtina meeting we will also provide a solution to the issue of mutual recognition of certificates companies use in trading goods across borders," the Kosovo minister said.

Kosovo experts had earlier complained Albania still doesn’t recognize certificates of origin issued by Kosovo authorities which makes the export of Kosovo products to Albania difficult and causes unnecessary long lines and wait-times at the Vermice border crossing point with Albania.

Albania's trade exchanges with Kosovo dropped by 15 percent to 22.4 billion lek (€162 million) in 2016, registering a three-year low.

Kosovo has emerged as Albania's second main destination for exports, dominated by “fuel, electricity, construction material and metals.”

Ongoing trade disputes between Albania and Kosovo over potatoes, cement, milk, flower, wine and pharmaceutical products have considerably curbed trade exchanges between the two neighboring countries in the past few years.

Albania’s trade exchanges with Kosovo increased to a historic high of 26.4 billion lek (€187.6 million) in 2015, up 6.7 percent compared to 2014 but more than double compared to about 10 billion lek (€72 million) in 2009 when Albania completed the Durres-Kukes highway but Kosovo had not built its part of the Highway of Nation yet.

While traditional factors due to the isolation and lack of communication between the two Albanian-speaking countries for almost five decades until the early 1990s and the late 1990s Kosovo war that led to its independence from Serbia in 2008 partly explain the situation, the huge almost 2 billion euro investment in the so-called Highway of Nation on both sides of border sharply cutting travel time does not yet justify a slowly growing annual trade volume of €192 million between the two countries.

The Tirana and Kosovo Chambers of Commerce have also recently established a cooperation office to tackle ‘mistrust in mutual relations and failure to implement the initiatives undertaken by both countries.’

The two chambers have identified several barriers including "a climate of mistrust which risks undermining cooperation and the perspective toward a national economy."

Chamber representatives say practices enabling the quick movement of goods are not working while lack of 24/7 phytosanitary experts for 24 hours makes the timely circulation of food products.

"The considerable decline in exports from Albania to Kosovo and vice versa leaves room for other countries to fill this void. The common energy project is also being held back because of political barriers imposed by Serbia," they say.

In mid-2016, Albania and Kosovo inaugurated a German-funded 400 kV interconnection line that will help the two neighboring countries increase energy security by diversifying electricity resources and set up a joint energy market, but its launch is being held back by Serbia over a transmission grid dispute with Kosovo.
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                    [post_content] => TIRANA, Jan. 19 - Albania is expected to register one of the highest growth rates among regional EU aspirants in the next couple of years, but needs to continue its fiscal consolidation efforts and bring down public debt as it currently hovers at about 71 percent of the GDP, the European Commission says in a quarterly report on enlargement countries.

The European Commission expects the Albanian economy to grow by 3.2 percent in 2016 and pick up to 3.5 percent in 2017 and 2018, in forecasts which are between 0.2 to 0.6 percent lower compared to the Albanian government's more optimistic forecasts.

Albania's 2016 economic expectations are 0.5 percentage points higher compared to Serbia and Montenegro and 1.1 percent higher compared to neighboring Macedonia. The 2017 and 2018 prospects are slightly less optimistic as all regional EU aspirant economies are expected to register growth rates of above 3 percent.

“In Albania, a broad-based undershooting of budgeted expenditures resulted in a general government surplus of 0.5 percent of GDP in the first eleven months. Continued fiscal consolidation (without, however, undermining much-needed capital spending) is necessary in a number of countries to rebuild fiscal buffers and reduce the level of public debt which is especially high in Serbia (72.1 percent of GDP), Albania (70.8 percent of GDP) and Montenegro (60.8 percent), and lower but on an increasing trend in Macedonia,” says the European Commission report.

The Commission, which has made a positive recommendation about opening EU accession talks with Albania provided the country implements its long-awaited justice reform and tackles corruption, warns external imbalances remains a key challenge for the country.

“External imbalances remain a key challenge in most Western Balkan countries, reflected in large merchandise trade deficits ranging from 12 percent of GDP for Serbia to around 19 percent or above for Macedonia, Albania, and Bosnia and Herzegovina and above 40 percent for Kosovo and Montenegro,” says the report.

The European Commission has earlier warned the upcoming mid-2017 general elections and the end of a 3-year IMF supported programme could put at risk the country’s fiscal consolidation path.

“In the run-up to next year’s election there is a risk that the government relaxes its fiscal consolidation plans, which will lose an important anchor following the end of the country’s IMF-supported programme in February 2017,” says the Commission.

The run-up to general elections has always been accompanied by threats to public finances in Albania in the past 25 years of transition with incumbent governments sharply increasing public investments and putting at risk budget deficit and public debt targets, apparently to gain an electoral advantage.
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                    [post_content] => TIRANA, Jan. 18 – Albanians are expected to pay twice for crossing the Highway of Nation linking Albania to Kosovo, directly through the average €5 toll the concessionaire will collect and indirectly through taxpayer money in government subsidies for traffic guarantees in return for investment and maintenance for the next 30 years.

In the contract signing with the country’s first toll road winning concessionaire, a consortium composed of United Arab Emirates, Albanian and Greek companies, the Public Procurement Agency has unveiled the Albanian government will pay the concessionary a total of €65 million in the next 30 years, at an average of €2.16 million annually.

The concession expected to kick off by early 2018 will charge an average of €5 at differentiated tolls ranging from €2.5 for motorcycles, to €5 for four-wheeled vehicles, €11.25 for buses and six-wheeled vehicles. Trucks and multi-axle buses will pay between €16.25 to €22.5.

The tolls are expected to be indexed to inflation in the Euro area and Albania each year, something that will probably significantly further increase costs in the next few years as inflation rate is picking up with the hike in oil prices.

Only ambulance, police, military vehicles as well as fire trucks will be stripped of the toll while local residents in northeastern Albania, one of the country’s poorest areas, will be somehow compensated as the concessionaire is expected to pay €120,000 in the first three years of the concession period.

The signing of the contract over a 30-year concession to upgrade and manage a 114-km highway linking Albania to Kosovo comes after the controversial cancellation of an initial winning bid by a Turkish-led consortium and amid strong opposition by the local community and businesses who fear the planned €5 tolls will isolate northern Albania and reduce the number of tourists coming from Kosovo.

Last September, the Public Procurement Commission ruled the transport ministry’s bid evaluation commission must invalidate the bid by a Turkish consortium led by Vendeka Bilgi Teknolojileri Ltd and announce a United Arab Emirates-consortium led by Catalyst Viva Das General Contracting LLC which also included several Albanian partners as the winner.

The Turkish consortium led by Vendeka Bilgi Teknolojileri Ltd bid to invest an initial €50 million and requested state subsidies of €5.6 million compared to the UAE-led consortium’s proposed initial investment of €43.4 million and state subsidies of about €5 million.

The winning concessionaire is supposed to collect and keep toll revenue and in exchange implement and finance motorway improvement measures, construct a new bridge on Drini River in Kukes, northeastern Albania and carry out emergency geotechnical and stabilization works.

Linking Milot, approximately 60 km northeast of the Adriatic Port of Durres, with Morine at the Kosovo border, the route forms the central section of the wider Albania-Kosovo highway, connecting Durres with the Kosovo capital Prishtina.

Operational since June 2009, the Durres-Kukes highway and its 5.5 km twin-bore Thirre tunnel is estimated to cost government around €4 million annually in maintenance.

The highway, which is estimated to have cost Albania a staggering €1 billion became fully open to traffic in 2010. Its major 60 km Rreshen-Kalimash segment was built by Bechtel-Enka, a U.S.-Turkish consortium.

The highway has given a boost to trade exchanges with Kosovo which has emerged as Albania’s second most destination of exports, but has yet to justify its huge investment considering the current low levels of trade exchanges between the two countries.

If Kosovo also concludes plans to impose tolls on its part of the Highway of Nation, a return trip to the neighboring country could cost an extra €20, becoming a significant barrier for businesses and households in both countries, who are among Europe’s poorest.

The expected introduction of €5 tolls for the Albania-Kosovo highway sparked reactions by the opposition Democratic Party and the local business community who fear increased costs will have a negative impact on Albania-Kosovo trade exchanges and tourists arrivals. Kosovo is the country’s second largest trading partner for exports while tourist arrivals from the neighboring ethnic Albanian country account for about half of foreign visitors in Albania’s ‘patriotic’-dominated tourism.

The tolling is unlikely to kick off in 2017 even for political and economic reasons as the country will be heading to general election in June 2017 and expects hundreds of thousands of Kosovars to visit Albania during the summer vacations.
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            [5] => WP_Post Object
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                    [ID] => 130711
                    [post_author] => 29
                    [post_date] => 2017-01-17 13:53:20
                    [post_date_gmt] => 2017-01-17 12:53:20
                    [post_content] => TIRANA, Jan, 17 - Fuelled by the resumption of electricity sales and a pickup in commodity prices in late 2016, Albania's exports registered a turning point last December ending 2016 with a growth rate just slightly above zero following a 5 percent decline in 2015 when exports returned to negative growth rates after contracting in 2009 soon after the onset of the global financial crisis, according to state statistical institute, INSTAT.

Albania's exports rose by a mere 0.12 percent to 243.5 billion lek (€1.75 billion) in 2016 covering only 42 percent of the country's total imports which rose by 6.3 percent, further widening Albania's trade gap.  After contracting by 7.2 percent in 2009, Albania's exports registered strong double-digit growth rates in 2010, 2011 and 2013 boosted by a boom in oil exports before registering a modest 3.8 percent increase in 2014 when oil prices more than halved.

The garment and footwear sector, the country's traditional top exporting industry employing about 100,000 people was the key driver of exports, registering an 18.3 percent increase to 106.6 billion lek (€770 million).

Meanwhile, "minerals, fuel and electricity" contracted for a third year in a row following the mid-2014 slump in commodity prices severely affecting Albania's poorly diversified exports considerably relying on oil and minerals.

Exports of "minerals, fuel and electricity" dropped by 28 percent to 46.5 billion lek (€336 million) in 2016, less than half the peak level of about 100 billion lek (€718 million) in 2013, when they emerged as the country's top exports.

The slump in commodity prices has considerably affected one of the country's key industries, with negative implications in employment and government revenues as companies have slowed down production waiting for commodity prices to recover.

Exports of construction materials and metals also suffered in 2016 as one of the country's biggest companies, Turkish-run Kurum steelmaker filed for bankruptcy, temporarily suspending production.

Imports of “machinery, equipment and spare parts,” the country's top imports, rose by 11.4 percent to 130.7 billion lek (€944 million), mainly thanks to some major energy-related investment, especially the Trans Adriatic Pipeline, already in its pipeline construction stage.

Italy continued remaining Albania's top trading partner accounting for 70 percent of total garment and footwear-dominated exports and almost half of imports. China was the country's second largest trading partner for the second year in a row with a slight advantage over traditional partner Greece.

Meanwhile, trade exchanges with neighbouring Kosovo, the second major destination of Albanian exports, suffered a blow in 2016 apparently affected by lower fuel and construction material exports.

The 2017 export prospects appear more optimistic as international oil prices are expected to slightly pick up with a positive impact on new drilling plans by oil companies.

Albania’s exports heavily rely on garment and footwear manufacturing as well as oil and base metals whose share in the country’s exports is estimated at two-thirds, making them vulnerable to international headwinds.
                    [post_title] => Exports overcome contraction with modest 0.1% pickup for 2016 
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                    [post_date] => 2017-01-17 11:07:07
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                    [post_content] => TIRANA, Jan. 17 - Albania has had one of the region's highest growth rates in the aftermath of the global financial crisis in 2008, but when it comes to inclusive growth it stands in the middle of 79 developing countries, according to a report by the World Economic Forum, a Switzerland-based think tank.

On a 1 to 7 scale with one representing the worst and seven the best, Albania scored 4.02 to rank 38th among 79 developing countries at the Inclusive Growth and Development Index, worse than neighboring Macedonia which ranked 24th, but better compared to Serbia's 42nd. Albania's 2017 rating represents a 5.58 percent decrease compared to five years ago, meaning growth ranging between 1 to 3 percent annually has failed to become more socially inclusive by promoting incentives to work, save and invest.

Albania scores 32 in the GDP per capita and 38th out 79th in the Inclusive Growth and Development Index, indicating that its growth has not translated well into social inclusion.

A lower middle income country with a GDP per capita of $4,541, Albania ranked 16 out of 79 in inclusion, measuring net income inequality, poverty rate and wealth inequality but with a 6.2 percent decline in the past five years. The country ranks 49th out 79 developing economies in intergenerational equity, a GDP limitation referring to whether economic performance is being pursued at the expense of future generations and 53rd in growth and development, measuring GDP per capita, labour productivity, healthy life expectancy and employment.

The report notes many countries have significant unexploited potential to simultaneously increase economic growth and social equity. “But activating the virtuous circle of inclusive growth more fully will require them to change their approach to structural reform, reimagining it as an ongoing process of continuous improvement within a diverse ecosystem of demand- and supply-side policies and institutions, the combined effect of which is to diffuse opportunity, income, security, and quality of life as part of the growth process,” says the report.

The Albanian economy has grown between 1 to 3 percent annually since 2009 compared to a pre-crisis decade of 6 percent annually, being one of the best performing among regional EU aspirants.
                    [post_title] => World Economic Forum: Albania fails to make economic growth more inclusive
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                    [post_author] => 29
                    [post_date] => 2017-01-16 17:20:27
                    [post_date_gmt] => 2017-01-16 16:20:27
                    [post_content] => TIRANA, Jan. 16 - Europe's single currency has gained a slight advantage against Albania's national currency in the first two weeks of January after hitting a six-year low last December when it fell as low as 134.4 lek, with a negative impact on the country's ailing exports, already suffering due to a slump in commodity prices affecting oil and mineral prices.

The Euro climbed by almost 2 lek in the past sixteen days to reach 137.23 lek on Monday, but remained significantly below its average level of 139 to 140 lek until late 2015, according to the central bank’s fixed exchange rate.

Experts say the situation is a result of both domestic and international developments. Demand for Euro in the domestic market is currently reported to have increased following the December inflow with the arrival of thousands of migrants from the Eurozone to spend their year-end holiday at home. The hike also comes as the government is seeking to borrow between €40 million to €50 million in two-year notes in a Jan. 20 auction after having borrowed €35 million earlier in December.

The depreciation of lek also comes as the U.S. dollar has also lost some ground against the Euro in the past month.

Some local experts have partly blamed the rising cannabis cultivation and the increased presence of Euro in Albania due to drugs sales abroad for the sharp depreciation of lek against the Euro.

The Albanian economy is highly euroized with euro-denominated deposits and loans accounting for half of the total. The euro is also the main currency used in the real estate industry.

The national currency has also slightly depreciated against the U.S. dollar in the past few months. The U.S. dollar, whose weight on the Albanian economy is much smaller accounting for 10 percent of lending, climbed to 129.49 lek on Monday, in a gradual upward trend in the past five months after hitting a 12-year high of about 130 lek in April 2015.
                    [post_title] => Lek loses ground against Euro, U.S. dollar
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                    [ID] => 130697
                    [post_author] => 29
                    [post_date] => 2017-01-16 14:34:23
                    [post_date_gmt] => 2017-01-16 13:34:23
                    [post_content] => TIRANA, Jan. 16 - With domestic electricity generation currently wholly reliant on hydroelectricity, Albania has large untapped wind and solar energy potential that can be cost-competitive, UAE-based International Renewable Energy Agency (IRENA) has unveiled in a South East Europe report

“Due to the very good solar resource and relatively satisfactory wind speeds (3.3-9.6 m/s), there is high, untapped potential for the deployment of solar PV (up to 1.9 GW) and wind (987-2 153 MW),” says the report, adding that low temperatures of geothermal reservoirs make geothermal power generation an unlikely option in Albania.

The renewables can already be considered viable alternatives in designing actions aimed at achieving the 2020 and other future renewable energy targets.

Hydropower is still considered the cheapest renewable energy option in Albania which has large, additional cost-competitive hydro potential of more than 2 GW, available on the Drin and Vjosa, but also on many smaller rivers, notes the report exploring cost-competitive renewable power generation and their potential across South East Europe.

Back in 2015, Albania met almost 80 percent of its electricity needs through domestic hydroelectricity generation with private and concession HPPs accounting for a quarter of domestic electricity.

The IRENA report says wind and solar photovoltaic power plants in Albania could already generate electricity with levelised cost of electricity, LCOEs, of less than EUR 50/MWh for wind and slightly above EUR 70/MWh for solar.

Despite interest by several international companies, no wind or solar energy projects are currently being implemented in Albania where there is no comprehensive and supportive regulatory framework for the deployment of renewable energy sources other than hydropower yet.

The report notes Solar PV and wind energy are today already viable options for the  SEE region.

While Albania relies for its power generation almost entirely on hydropower, Kosovo relies predominantly on lignite, while other countries have a mix of hydro- and fossil fuel-based power generation. Bulgaria, Romania and Ukraine are the only countries in the region that already have significant solar PV and wind energy capacity, totalling some 7.8 GW in 2015.

The report suggests the deployment of renewables offers a number of socio-economic benefits beyond cost effectiveness, including job creation; the development of local manufacturing capacity, reducing health and environmental costs and addressing climate change risks.

As for the projections for 2030 and 2050, with the expected further decline in technology costs, as well as the expected lower cost of capital in the mid- to long-term, the cost-competitive wind and solar PV potential of the SEE region is expected to further grow to more than 650 GW by 2030, adds the report.
                    [post_title] => Albania has high untapped solar, wind energy potential, report shows
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                    [post_date] => 2017-01-16 11:20:56
                    [post_date_gmt] => 2017-01-16 10:20:56
                    [post_content] => Risks

TIRANA, Jan. 16 - Economic and geopolitical risks top Albanians' concern over doing business in their country in the next 10 years, according to a survey published by the World Economic Forum in its 2017 Global Risks Report.

Fiscal crises, interstate conflict, illicit trade, terrorist attacks and failure of a financial mechanism or institution were rated as the top five global risks Albanians believe will be of the most concern for doing business in their country over the next decade.

Fiscal crises, involving excessive debt burdens that generate sovereign debt or liquidity crisis was a top concern for about a quarter of respondents in the survey conducted between February and June 2016.

Albania's current public debt hovers at about 71 percent of the GDP, a high level for Albania's stage of development, curbing much-needed investment in key sectors due to high interest spending. Businesses have also been suffering in the past few years due to a high tax burden and a slump in commodity prices affecting key oil and mineral exports.

Interstate conflict with regional consequences was rated as a concern by half of respondents followed by illicit trade and terrorist attacks by more than a third of those surveyed.

The failure of a major financial mechanism or institution that impacts the global economy and state collapse or crisis were equally rated as a concern by about 32 percent of respondents.

Natural catastrophes, deflation, extreme weather events, unemployment and energy price shocks were concern for 16 to 29 percent of respondents.

Reviving economic growth, reforming market capitalism, facing up to the importance of identity and community following societal trends of increasing polarization and intensifying national sentiment, managing technological change and protecting and strengthening systems of global cooperation were the five key challenges identified in the report.

In last year's survey, large-scale involuntary migration, locally known as the asylum exodus, emerged as the top concern for doing business in Albania after more than 50,000 Albanians left the country in 2015, mainly to Germany, with a negative impact on the small ailing economy of 2.8 million residents.

 
                    [post_title] => Economic, geopolitical risks top Albanians’ doing business concerns 
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            [post_date] => 2017-01-20 10:07:56
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            [post_content] => lendingTIRANA, Jan. 19 - Banks tightened lending standards for businesses in the final quarter of 2016 and do not expect to considerably ease them in the first three months of this year, a survey by the country's central bank has found.

The tighter standards comes as non-performing loans have embarked on an upward trend in the past few months reaching 20.44 percent last November, down from a record high of 25 percent in mid-2014, being a key barrier to credit which has been struggling to return to positive growth rates in the past year, also due to poor demand by businesses despite the easier monetary policy significantly cutting loan rates.

Banks’ profits dropped to about 6.5 billion lek (€46.8 mln) in the first three quarters of 2016 as non-performing loans rose to 21.3 percent.

Specific problems in the sector businesses operate, the high level of non-performing loans and the banks' perception on macroeconomic situation made lending standards tighter despite ample competition, liquidity and capital adequacy in the Albanian banking system.

Banks increased demand for collateral in the final quarter of 2016, something which made the loan application and approval process more difficult at a time when demand for new business loans remained almost unchanged, said the central bank.

"Banks expect lending standards to further tighten for big businesses in the first quarter of 2017 and slightly ease for small and medium-sized businesses. Demand for new loans is expected to pick up by both businesses and households," the Bank of Albania says in its survey.

Credit officially returned to positive growth rates in the third quarter of the year, overcoming a one-year period of contraction also affected by the write-off of non-performing loans from banks’ balance sheets artificially keeping credit at statistical negative growth rates.

The findings about lending standards and demand for new loans, contradict another central bank survey showing the business and consumer confidence continued recovering in the final quarter of 2016 when it climbed to 9.4 percentage points above its long-term historical average.

Confidence in the key services and construction sectors recovered in the final quarter of the year but slightly fell in the industry sector affected by the slump in commodity prices reducing the country's oil and mining exports. Confidence in the trade sector also slightly deteriorated but further improved among consumers, standing 3 percentage points above its historical average.

The Albanian economy is expected to face a tough start in 2017 after the country experienced the coldest winters in three decades, with heavy snowfall and icy weather paralyzing business in early January and severely damaging greenhouse crops.

However, a pickup in commodity prices is expected to reinvigorate oil and mineral exports which have been suffering since mid-2014 when international prices more than halved.
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