TIRANA, Nov. 12 – The Vienna Institute for International Economic Studies has upgraded Albania’s economic outlook for the next couple of years on an expected boost in foreign direct investment and positive impacts from what it calls a “rigorous campaign against shadow economy.”
In its latest update on Albania’s outlook, the Vienna Institute which is one of the top centers for research in Central, East and Southeast Europe, has upgraded Albania’s 2015 GDP growth forecast to 2.6 percent, up from 2 percent last May and expects the Albanian economy to accelerate to 3.2 percent in 2016 and 3.6 percent in 2017, in line to forecasts by the Albanian government and the IMF.
“A credit market lacking vigour, a contraction of exports and meagre fiscal performance are restraining economic growth. Differently, an outstanding performance in terms of gross fixed capital formation, foreign direct investments and remittances, which are flourishing again, is expected to boost the economy by 2.6 percent in 2015,” says the Institute.
“Growth above 3 percent is expected in 2016-2017. The rigorous campaign against the shadow economy and consequently a more efficient tax collection can open up more space for public investments,” it adds.
The Vienna Institute expects Albania’s unemployment rate to slightly drop to 16 percent by 2017, compared to 17.5 percent in 2014.
Inflation rate is expected to range between 2 percent in 2015 to 2.5 percent in 2017, which is below the central bank’s 3 percent target estimated to have a positive impact on economic growth.
The Institute has earlier praised Albania’s reform in the energy sector but expressed concern over the fiscal austerity and the high levels of non-performing loans and external imbalances which may threaten the country’s GDP growth.
