The IMF also expects a record inflation rate, at an average of 4.5 percent, 0.5 percent above the central bank’s target band.
Tirana Times
TIRANA, May 16 – Albania’s 2011 GDP growth will be based more on domestic demand and private consumption rather than exports, the International Monetary Fund stated in its latest regional economic outlook published this month. The IMF expects the Albanian economy to grow by 3.4 percent in 2011, down from 3.5 percent in 2010נregistering the second highest growth rate among non-EU Southeastern European countries after Kosovo. IMF data also show that real domestic demand will return to positive growth rates in 2011, at 4.1 percent, compared to -8 percent in 2010. Real private consumption is also expected to grow by 3.3 percent, up from -5.1 percent last year. However, exports which were the main driver of the country’s economic growth in 2010, are expected to grow by only 1.2 percent, down from 29 percent in 2010. The IMF also expects a record inflation rate, at an average of 4.5 percent, 0.5 percent above the central bank’s target band. The current account balance is also expected to diminish slightly to -11.2 percent of the GDP compared to -10.1 percent in 2010. The IMF report says Albania’s public debt will rise slightly to 59.9 percent, up from 59.7 percent in 2010. However, total external debt is expected to drop to 37.7 percent of the GDP, down from 41.6 percent in 2010. The IMF estimates are far lower compared to the government’s projection of a 4.1 percent growth in 2010 and a 5.5 percent growth in 2011. IMF experts expect the Albanian economy to slightly increase to 3.6 percent in 2012 and return to normal growth only by 2016 when the GDP is expected to grow by 4.5 percent. According to the IMF, growth in Albania averaged some 6ܠpercent during 2005-08, largely based on advancements in total factor productivity, while inflation was kept in check. Although current account deficits have crept up over time, they mainly reflect an ambitious public investment program and transition-driven productivity gains. Before the crisis, Albania enjoyed strong growth with comparatively benign external vulnerabilities. Sustained macroeconomic stability, a simplification of the tax system, and structural reformsةn the context of subsequent fund-supported programs and generally good implementation of past fund adviceبelped boost investment and productivity. However, in the wake of the global economic crisis, Albania’s GDP growth halved to 3.3 percent in 2009, down from 7.7 percent in 2008. With budget revenues expected to grow by 11 percentנ2 percent more than under the revised 2010 budgetנthe Albanian economy will likely achieve a GDP growth rate of more than 5 percent; provided no major cuts are made mid-year, as was the case in 2010. Asked by reporters if the 2011 draft budget was realistic, IMF’s Gerwin Bell and Finance Minister Ridvan Bode had differing opinions last year when the government was drafting the budget. Bell said that IMF considered any draft budget with a revenue growth higher than 6 to 7 percent to be immature. “It is better that the year starts with a more realistic and mature projection in order to make its implementation in 2011 easier,” said Bell. According to him, lowering budget deficits to 2.5 percent in 2011 would also have a positive impact on public debt and achieve the Albanian fiscal policy’s goal of bringing it down to 54 percent by 2013. At the global level, the IMF report states that recovery is gaining strength, but unemployment remains high in advanced economies, and new macroeconomic risks are building in emerging market economies. World real GDP growth is forecasted to be about 4ݠpercent in 2011 and 2012, down modestly from 5 percent in 2010. Real GDP in advanced economies and emerging and developing economies is expected to expand by about 2ݠpercent and 6ݠpercent, respectively.
Exports in 2010
The growth of exports in 2010 contributed to the expansion of overall demand and GDP as well as to the smoothing of external imbalances and the stabilization of the exchange rate. Total exports in 2010, amounted to 161 billion ALL and increased by 55.7% as compared to 2009. The most important increase of exports was concentrated during the first half of 2010. The recovery continued in the second half of the year. This trend in exports has continued in January and February 2011. This increase is due mainly to metals and electricity exports and also to the fact that the key sectors have improved their performance. Some of the sections that have experienced highest exports increase as compared to 2009 are main metals, mineral products, oil, electrical energy, leather products, and munitions. Trade flows of electrical energy were valued at 22.4 billion ALL having increased by 29.5% in 2010. This is mainly due to the increase of exports, which reached 10.5 billion ALL in 2010, experiencing a 268% increase. Electrical energy was exported to Switzerland which accounts for 56% of total exports, Serbia (14,4%), the Czech Republic (14%) and Slovenia (12.2%). This March, exports registered a considerable drop compared to the previous month, signaling a falling trend. INSTAT data show exports in March 2011 totaled around 17 billion ALL, down 15.4 percent compared to February 2011 but up 16.5 percent compared to March 2010. Meanwhile, imports rose 43 billion ALL, up 13.9 percent compared to February 2011, and 12.6 percent compared to March 2010. After a drop in the first two months of this year, the trade gap in March 2011 rose to 26 billion lek (260 million dollars), up 47.2 percent compared to February 2011 and up 10.2 percent compared to March 2010, according to the latest data published by Albania’s Institute of Statistics. The situation was a result of a drop in exports and a considerable growth in imports.
