COVID-19, Albanian economy among the most vulnerable

Tirana Times
By Tirana Times April 1, 2020 16:01

COVID-19, Albanian economy among the most vulnerable

TIRANA, April 1 - Albania is likely to suffer significant losses in the tourism sector due to the COVID-19 pandemic, according to S&P Global Rating's Stress Scenario. The analysis, based on three scenarios from 'limited' and 'extensive' to 'extreme', ranks Albania among the 15 countries which would suffer the biggest shock in tourism as a result of the pandemic, such as Aruba, the Bahamas, Barbados, Cape Verde, and Fiji.

Albania would experience the most significant deterioration in terms of external indebtedness, after Cape Verde and Montenegro, facing a worsening of the ratio by at least 10 percentage points.

Moreover, small 'Sun, Sea, and Sand' island destinations would be the worst affected from a slowdown in global tourism flows, according to the analysis.  The second most affected region would be the central and eastern Europe, especially the Balkans, with Montenegro being the most vulnerable to the shock.

However the analysis further shows that Albania and Georgia additionally appear somewhat vulnerable, but, given both countries' relatively healthier starting position on their external balance sheets, they appear somewhat more capable of handling the shock.

The COVID-19 outbreak is a serious and negative development that could, under some scenarios, permanently put at risk the globalization of services sectors, not least tourism. Since tourism is also a labor-intensive sector, there would potentially be a big hit to employment levels in countries such as Spain and Greece, which are still posting high structural unemployment.

THE S &P believe global GDP will be between 1.6-2.1 percentage points lower compared to December 2019. The initial data from China suggest a significantly deeper economic impact of the social-distancing measures than previously feared. These measures are now being aggressively enacted in a growing number of European countries.


Based on the S&P analysis, former deputy of the Democratic Party Jorida Tabaku said that the economy is at risk because Albanians and above all the middle class that has kept the burden of high taxes, small businesses that are keeping over 200,000 families just above the poverty line are being hit hard by the coronavirus measures. Citizens 'consumption has fallen, businesses' investments to expand their business has declined. Wages are low while the living costs have increased.

"Unless the government intervenes today to unveil a serious economic plan to serve the citizens and the economy, Albanians will suffer the economic crisis longer than the entire region. The ridiculous amount of 14 million lek for only a third of small businesses is inadequate."

Tabaku called for the suspension of tenders unrelated to the coronavirus crisis and stressed that the government needs to provide Albanian businesses, the self-employed, pensioners and families in need with all the necessary resources through the state budget.

According to the Bank of Albania statistics, the country's economy benefits about 2 billion euros from tourism. If the coronavirus pandemic continues through the summer, then there won't be any income from this sector. This amount does not include the financial damage from the hospitality sector, mainly hotels.

Tirana Times
By Tirana Times April 1, 2020 16:01