TIRANA, Jan. 8 – Although the economy grew by only 2.9 percent during the first nine months of 2019 and the consequences of the devastating November 26 earthquake are expected to further exacerbate the economic growth throughout all 2020 in addition to the last quarter of 2019, the Ministry of Finance and Economy expects that the growth indicator will be 4.3 percent and 4.4 percent in 2019 and 2020 respectively.
This leaves previous forecasts unchanged and does not calculate the effects of the earthquake on the economy, based on the latest mid-term budget report published by the Ministry of Finance.
Earlier in December, during a parliamentary session on the budget report, the Ministry of Finance stated that economic growth would decline by at least 1 percentage point in 2020, even without taking into consideration the effects of the earthquake, as a result of the lack of generated energy due to the droughts.
According to the mid-term budget report, the economy is expected to continue its positive trend in the mid-term. Economic growth is projected to remain above 4 percent over the next three years at an accelerated pace, albeit marginal. Specifically economic growth is projected to be 4.4 percent in 2020 from 4.2 percent in the 2018 economic outlook and 4.3 percent in the 2019 outlook. In the next two years growth is predicted to continue at a marginally accelerated rate, precisely by about 0.1 percentage points, reaching 4.5 percent in 2021 and 2022, respectively.
Over the medium term, growth is expected to be mainly driven by domestic demand, specifically by both private consumption and investments. Simultaneously, employment is expected to grow at an average of about 2.4 percent per year during the 2020-2022 period. The growth of the labor force participation rate will be the main cause of the increase in employment, according to the draft budget.
During the mid-term, the fiscal policy aims to reduce the overall fiscal deficit to 1.6 percent of the GDP for 2020, from the 1.9 percent predicted for 2019 ,followed by 1.2 percent of GDP in 2021 and 1.1 percent in 2022. Meanwhile, investments in the economy are expected to grow by an average of about 5.9 percent per year in real terms, with a slight acceleration in 2021 and 2022 and with an average contribution to the total growth by about 1.5 percentage points per year.
