Debate on Albania’s 2009 economic growth

TIRANA, Nov 24 – The International Monetary Fund decreased its forecast for Albania’s 2009 economic growth to between 3.5% and 4%, but the government says in its budget it will be 6.2 percent.
Prime Minister Sali Berisha has also said it will be a double-digit growth, which has sparked an outcry from the opposition.
The central Bank of Albania, on its side, has said the growth will be up to 4.5 percent.
Initially IMF forecasted GDP growth of between 5% and 6%. The Albanian government said it expected economic growth of 6% in 2008 and 6.2% in 2009. Last year the country’s GDP growth was 5%.
The government denies to accept that the global financial crisis is to negatively affect Albania as well.
The opposition also criticizes the government for not making any contingency plan in case of a crisis effect in the country.
Experts say that Albania cannot be excluded from the global crisis taking into consideration that some 13-14% of its GDP comes from some one billion Euros of remittances of more than one million immigrants, basically in Greece and Italy, two countries that have declared their fear of the crisis.
Albania, with significant remittances from their respective ꮩgr顣ommunities in the West combined with the highest unemployment rates in Europe, stands in the middle of a perfect economic storm. Albania can expect a decrease in remittances, decrease in foreign aid and investment, and increase in unemployment domestically and among its diaspora communities.
But unlike the more stable economies of the former Eastern Europe, a plunge in remittance is expected to have a serious impact on the local economy and on the respective political environment.
Albania can be categorized as a consumer society. In addition to remittances it relies on foreign investment and international aid. The international community is expected to uphold its aid commitment for the current financial cycle. A direct consequence to Albania may be cut backs on international aid. Foreign investments are also expected to decrease dramatically.
Albania should brace itself for an increase in unemployment and a significant drop in their respective GDPs. A significant number of Albanians working abroad can expect to lose their jobs. It should come as no surprise to Tirana that repatriation of the Albanians to the homelands by Western European may soon follow. Albania was the first to sign the repatriation deal with the European Union, in an effort to liberalize visas that has yet to come.
Unlike many other countries in Eastern Europe Tirana has not begun negotiations with the major international lending institutions for emergency relief funds. The government has also not set any amount in that case at its next year’s budget.