WB: Albania's economy may shrink up to 5.9% due to COVID-19

Tirana Times
By Tirana Times April 29, 2020 17:19

WB: Albania's economy may shrink up to 5.9% due to COVID-19

TIRANA, April 29 - Albania's economy is projected to contract by about 5 percent under the baseline scenario of how the coronavirus pandemic unfolds in Europe, the World Bank stated on Wednesday.

The baseline scenario assumes that containment measures can be lifted by the end of June and a gradual recovery can begin in the second half of 2020. The downside scenario assumes that the outbreak lingers and containment measures can only be lifted at end of August, with a recovery of economic activity only in final quarter of 2020.

As for the entire Western Balaksn region, the World Bank foresees that the economies of the 6 countries will contract between 3 to 5.6 percent.

"The magnitude of the recession depends on the duration of the pandemic in Europe. While the economic impact of the ongoing pandemic in the region is difficult to forecast, there is little doubt that this pandemic is wreaking havoc on lives around the region - taxing health care systems, paralysing economic activity, and undermining the wellbeing of people," Linda Van Gelder, World Bank Country Director for the Western Balkans, said.

According to the World Bank, the recession in all Western Balkan countries will be driven by a significant drop in both domestic and foreign demand during the pandemic. Travel restrictions and social distancing measures have a particularly protracted impact on tourism and services, the latter accounting for around 50 percent of total employment in five countries in the region and 75 percent in Montenegro.

Albania and Kosovo, the economies of which largely rely on service exports and tourism, will be hit significantly hard as their economies are projected to contract by about 5 percent, under the baseline scenario. Bosnia, North Macedonia and Serbia which have mostly export-oriented economies are expected to experience a slightly less significant slowdown; their economies may contract by 3.2 percent, 1.4 percent and 2.5 percent respectively.

On the other hand, under the downside scenario, Albania’s economy is expected to shrink by 6.9 percent while Kosovo’s economy would shrink by 11.3 percent.

"Over the medium-term, growth is expected to rebound strongly in the region, as economic activity gradually returns to normal, but this also depends on the length and intensity of the current crisis, as well as what steps policymakers take to address this pandemic," Van Gelder added.

According to the report, additional support may be necessary to support all vulnerable groups in the region. Policy responses should therefore be calibrated to mitigate the immediate effects, adjust to new realities that may emerge, and to leave space to prepare the economy for a recovery.

Tirana Times
By Tirana Times April 29, 2020 17:19