TIRANA, Nov. 15 – Albania’s rapidly ageing population as a result of massive immigration and lower birth rates are expected to have a negative impact on the country’s growth in the next five years, the central bank warns in a recent report.
“Despite the improving trend, the potential growth rate in the mid-run will continue to remain below the pre-2009 level. The population ageing and the immigration phenomenon as well as the poor recovery of productivity, will continue to remain deterring factors in the acceleration of potential growth rates,” says the central bank in a study.
The Albanian economy grew between 1 to 3 percent annually in the past eight years, compared to a pre-crisis decade of 6 percent annually, the growth rate estimated to bring tangible welfare to Albanian households, considering the current stage of the country’s economic development.
Growth of more than 3 percent of the GDP in the past couple of years has been fuelled by some major energy-related investment such as the Trans Adriatic Pipeline and a rapidly growing tourism industry.
“Although current estimates provide positive signals for a slight improvement in potential growth, they are yet coupled with uncertainties. These uncertainties are related not only to the continuation of positive developments in the external economic and financial environment, but above all to the progress and efficiency of domestic structural reforms,” says the central bank.
The Albanian government expects growth in the next four years to average at 4.5 percent annually, but international financial institutions are less optimistic about Albania’s outlook as major energy related taper off by 2018, curbing the positive impact of FDI-driven growth in the past couple of years.
International financial institutions have earlier warned structural reforms to increase productivity, address labor market rigidities and improve competitiveness are key to speed up Albania’s growth.
Shrinking populations pose a formidable fiscal challenge, placing public finances of countries under pressure on increased spending on pensions and health, reduce economic growth and make it more difficult to cut public debt as a share of GDP, according to an IMF research paper.
Albania’s estimated number of newborn babies fell to 31,733 in 2016, the lowest figure on record, further contributing to the ageing and shrinking of the country’s population,
The decline in Albania’s birth rate is a result of cultural changes in the typical Albanian household, decline in marriages and high emigration rates, experts note.
In 2015 and 2016, Albania was hit by a new emigration wave when more than 100,000 Albanians left the country in an asylum exodus, mostly to Germany, despite chances of obtaining protection being almost zero due to Albania being a NATO member and EU candidate country.
The latest 2011 census showed Albania’s resident population dropped by 8 percent to 2.8 million people compared to a decade earlier due to lower fertility rates and high immigration. Prospects are pessimistic as the population is expected to undergo another decline in the next few decades.
An estimated 1.5 million Albanians already live abroad, 1 million of whom in neighboring Italy and Greece. Their contribution to the Albanian economy in terms of remittances and investment has sharply waned in the past decade due to recession in their host countries and because of creating their own families and often taking their parents with them.
