TIRANA, Nov. 16 – The Vienna Institute for International Economic Studies expects the Albanian economy to grow slightly above 4 percent in the next couple of years driven by energy-related investment, consolidating public finances and a rapidly growing tourism sector.
The Vienna Institute outlook is in line with the Albanian government’s expectations and considerably more optimistic compared to forecasts by international financial institutions expecting Albania’s growth to slightly slow down next year as major energy-related investment such as the Trans Adriatic Pipeline enter their final stage.
The Institute expects Albania’s growth to recover to 3.9 percent in 2017, before accelerating to 4.2 percent in 2018 and slowing down to 4.1 percent by 2019. Consumer prices, currently at about 2 percent, are expected to meet the central bank’s 3 percent target by 2019.
“Strong investment in energy infrastructure will keep real GDP growth at around 4 percent in 2017 and during the remainder of the forecast period. These investments are mostly privately financed,” says the Vienna Institute, one of the top centers for research in Central, East and Southeast Europe.
The Institute refers to the Trans Adriatic Pipeline, already in its peak construction stage and a major hydropower project by Norway’s Statkraft, both of which complete by 2018.
“The budget of the re-elected government of Prime Minister Rama is in surplus. In addition, the tourism sector is doing well, and promises to be an ever more important driver of growth in the coming years,” adds the Institute.
Unlike previous electoral years, Albania’s public finances have performed well this year, with budget revenues registering a 7.2 percent increase in the first three quarters of this year and spending kept in check to produce most deficit in January-September 2017.
Meanwhile, prospects for the emerging tourism sector and the tax incentives the Albanian government is offering in its 2018 fiscal package for quality investment seem optimistic.
The tourism sector produced a record high of about €1.5 billion in 2016 when it emerged as one of the key drivers of the Albanian economy.
Albania’s 2017-2019 expected growth of about 4 percent is considerably higher compared to the Vienna Institute outlook for the other five EU aspirant Western Balkans countries.
Albania has been growing between 1 to 3 percent in the past eight years compared to a pre-crisis decade of 6 percent annually, estimated to bring welfare to the EU aspirant Western Balkan country.
