Italian Fin Minister: Albania was quickly affected by crisis

TIRANA, April 30 – The global financial crisis in 2009 put to the test Albania’s macroeconomic equilibrium, its financial system stability, as well as the business models and the financial sustainability of the private sector, Italian Minister of Economy and Finance has said.
Presenting a report at the International Monetary and Financial Committee (IMFC) in Washington, Giulio Tremonti said Albania’s economy was quickly affected by the global economic and financial crisis, despite the positive economic growth.
The economic slowdown was mainly attributed to lower investment and export activity. Industry and construction were the most exposed sectors of the economy to the crisis.
This is also confirmed by Institute of Statistics data published last month which showed that the Albania GDP decreased by 0.8 percent in the last quarter of 2009.
The construction sector was the hardest hit in the last quarter of 2009, recording a 14.4 per cent drop compared with same period of 2008 and an 11.8 per cent decrease from the third quarter of 2009, said INSTAT.
The industry group in general saw a drop of 4.1 per cent in the same quarter, while growth was evident in agriculture, transportation, services and communications sectors.
However, INSTAT estimates GDP grew by 3.3 percent in 2009.
Minister Tremonti who also spoke on behalf of Greece, Portugal and Malta at the IMFC, said the deposit withdrawals was the first sign of contagion from the financial crisis. It started at the beginning of the last quarter of 2008 and continued through the first months of 2009. “They not only affected the Albanian banking system and financial, but also resulted in lower financial intermediation – and at a higher cost – by the banking system. The average annual growth rate of credit to the private sector fluctuated around 13 percent, compared to 44 percent in the previous year,” added the Italian Minister.
He also expressed his concern over the current account deficit, currently at 15.3 percent,
sescribing it as one of the main vulnerabilities of the Albanian economy.
Tremonti praised the Albanian authorities for revising the law on deposit insurance to increase the insured amount of deposits which he said proved to be an important milestone in restoring confidence in the financial system
Despite the challenging conditions of lower domestic demand, exchange rate depreciation and financial sector turbulence, the Bank of Albania managed to successfully achieve its CPI inflation target during 2009.