TIRANA, Jan. 14 – The 3.3 percent growth rate in the third quarter of 2014 put the Albanian economy back on track as one of the best performers among enlargement countries, according to a European Commission report.
At 3.3 percent in the third quarter of 2014, Albania registered the second highest growth after Macedonia’s 4.1 percent. However, Albania’s annual growth for 2014 is estimated to be one of the lowest among the eight candidate and potential candidate countries, with only flood-affected Serbia and Bosnia estimated to register lower growth rates.
The European Commission’s Directorate-General for Economic and Financial Affairs estimates Albania’s growth for 2014 will be at 1.8 percent, up from 1.4 percent in 2013 and 1.6 percent in 2012. Both government and the IMF expect growth to be at 2 percent for 2014.
At 0.6 percent in the second quarter of 2014, Albania registered the second poorest growth rate among the eight candidate and potential candidate countries, according to the European Commission. Albania’s growth in the second quarter of 2014 was higher only compared to Serbia which was affected by severe spring floods in May 2014 and shrank by 1.1 percent.
After being one of the best performing enlargement economies from 2009 to 2012, at 1.4 percent in 2013 Albania’s growth dropped to the poorest performer among the EU aspiring countries.
Albania’s GDP per capita, an indicator of the standard of living, also dropped to 2,904 Euros in 2013, the lowest level in the past seven years and the poorest among enlargement countries, according to data published by Eurostat, the statistical office of the European Union.
At 2,904 euros in 2013, Albania’s GDP per capita was lower even compared to potential candidates Kosovo and Bosnia and Herzegovina and at only 11 percent of the EU 27.
Albania’s GDP per capita, a measure of economic activity, and the actual individual consumption, an indicator of the material welfare of households, ranks among the poorest in Europe, at almost a third of the EU 28, according to the latest Eurostat data.
The GDP per capita expressed in purchasing power standard, an artificial currency unit that eliminates price level differences between countries, was at 28 percent of the EU 28 in 2013, ranking the lowest in the region.
In Albania, credit growth turned positive in the third quarter and further accelerated thereafter. Furthermore, Albania is the only country where corporate lending grew much stronger than lending to households (5.1 percent vs. 0.9 percent in November).
Public debt at around 70 percent of the GDP and non-performing loans at around a quarter are among the highest in the region.
In the third quarter, non-performing loans made up 24.9 percent of total loans, up from 24.1 percent in the previous three months. This suggests that the ongoing clearance of government arrears has not yet had a noticeable impact and that further efforts are necessary to clean bank balance sheets in a sustainable manner.
Fragile recovery
Growth performance in the Western Balkans continued to be rather heterogeneous during the third and fourth quarter of 2014, says the European Commission. The economies of Albania, Bosnia and Herzegovina and Montenegro strengthened somewhat, as retail sales and industrial production picked up, the construction sector gained pace (this was the case in Albania) and the tourism sector moderately expanded despite unfavourable weather conditions (in Montenegro). However, the recovery remains fragile in all three countries, exemplified by a rather volatile industrial production. The economic situation is clearly worse in Serbia and still impacted by the fallout of the heavy spring floods
