The reduction in the imports of machinery is worrisome as this is a further indicator of the lack of private investment, says the Vienna Institute for International Economic Studies
TIRANA, Dec. 3 – The Vienna Institute for International Economic Studies has downgraded Albania’s 2013 GDP growth rate to 2.3 percent on declining investments and austerity measures announced by the new government. Although downgraded, the new forecast is far more optimistic compared to international financial institutions and the Albanian government itself.
“The recent reduction in the current account deficit is not only due to a robust export performance but also due to falling imports. Especially, the reduction in the imports of machinery is worrisome as this is a further indicator of the lack of private investment. This is also one of the reasons why we have to correct our GDP growth forecast for 2013 downwards, from 3.5 percent to 2.3 percent. Also, due to the prolonged deleveraging process in the Albanian business sector and announced austerity by the new Albanian government, we are compelled to reduce our GDP growth forecasts for 2014 and 2015 downwards, to 1.7 percent and 1.5 percent (from 2.5 percent and 3 percent, respectively) as compared to our last forecast report in July.”
The Vienna Institute’s forecast for 2014 and 2015 is at 1.7 percent and 1.5 percent respectively, rather more pessimistic compared to other international financial institutions.
International financial institutions such as EBRD, the IMF and the World Bank expect the Albanian economy to grow between 1.2 to 1.8 percent for 2013.
The Albanian government has also lowered its GDP growth forecast to 1.2 percent for 2013 after the economy grew by only 1.1 percent in the second quarter of the year.
Citing spillover impacts from the Eurozone crisis and fiscal challenges with public debt and non-performing loans, London-based EBRD has downgraded Albania’s GDP growth forecast to 1.2 percent for 2013 and 2 percent for 2014.
The International Monetary Fund expects the Albanian economy to remain sluggish in the next five years with growth rates ranging between 1.7 percent in 2013 to 2.5 percent in 2018. In its October World Economic Outlook, the IMF says the Albanian economy is expected to grow by 1.7 percent in 2013, up only 0.1 percent compared to 2012 when it registered its poorest GDP growth rate in the past 15 years and half of the average 3 percent growth rate from 2009 to 2011.
In its latest forecast made last summer, the World Bank World Bank expects the Albanian economy to grow by 1.8 percent, up from an estimated 1.6 percent in 2012.
