COVID-19, poverty expected to rise in Albania

Tirana Times
By Tirana Times June 1, 2020 12:56

COVID-19, poverty expected to rise in Albania

TIRANA, June 1 - The Covid-19 impact may lead to a significant surge in poverty in Albania. According to the latest World Bank report, the country's poverty rate could increase by 40 percent if the baseline scenario is taken into account. In the worst-case scenario, however, this rate could go up to 44 percent.

Thus, the report reads that in the more optimistic scenario, poverty would go back to the 2012 rate (39.10 percent) and, in the more pessimistic scenario, it would equal the 2005 rate (42.60 percent). Moreover, the unemployment rate is expected to increase to 48 percent, from the current 40 percent.

The report further notes that Albanian emigrants are also likely to suffer from this global crisis, which reduces their incomes and thus remittances. Since most of the people working in agriculture are already poor, and the simulation assumes no income decrease in agriculture, the increase in poverty is mainly the result of urban people in services losing a significant share of their earnings.

It is estimated that, in the Western Balkans, without considering government response measures, the COVID-19 crisis would push at least 400,000 people into poverty, and up to 950,000 if the crisis is prolonged.

All six countries would have thousands more citizens falling into poverty—and reversing the progress made in reducing poverty in the past five to eight years. In the first simulated scenario, COVID-19 is estimated to increase the poverty rate (by upper-middle-income standards) by 1 to 4 percentage points (pp) in all six countries. Poverty increases more if the crisis lasts through August, based on the second scenario, for example, by 3 pp in Montenegro to 10 pp in Kosovo. T

The share of the vulnerable is estimated to go up in North Macedonia, Montenegro, and Serbia, and in the other countries, movement from vulnerability into poverty surpasses the movement from the middle class into vulnerability.

In all the countries, the crisis also reduces the share of the population who are economically secure by 3 to 5 pp in the first scenario, and about 6 to 10 percentage points in the second scenario.

In the report, the World Bank recommends that the governments of the six countries ensure basic services, food security, shelter, and basic social services for the most vulnerable. Moreover, policy responses must focus on protecting livelihoods and facilitate recovery, for informal as well as formal sector workers.

Tirana Times
By Tirana Times June 1, 2020 12:56