The Albanian economy performed better than all aspiring EU countries expect for Turkey whose economy grew by an average of 2.6 percent in the first three quarters of 2012 and Iceland which posted a 2 percent growth rate
TIRANA, Jan. 15 – Although moderately growing by 1.5 percent in the first three quarters of 2012, the Albanian economy has been one of the top performers among nine EU candidate and potential candidate countries. The latest quarterly report published by the European Commission Economic and Financial Affairs Directorate-General shows the Albanian economy performed better than all aspiring EU countries expect for Turkey whose economy grew by an average of 2.6 percent in the first three quarters of 2012 and Iceland which posted a 2 percent growth rate. Acceding Croatia and EU candidates Macedonia, Montenegro and Serbia all registered negative growth rates in the first nine months of this year while no quarterly GDP data are available on Bosnia and Herzegovina and Kosovo for 2012.
In most pre-accession economies, annual GDP growth slowed down in the third quarter of 2012. It only accelerated in Albania and turned positive, compared to the previous quarter, in Iceland and Macedonia.
With an estimated growth rate of 3 percent in 2011, Albania’s economy is the only one among the 9 EU candidate and potential candidate countries to have recorded a lower GDP growth rate compared to 2009 when all EU aspirants registered negative growth rates, revealing that although initially immune to the crisis, recovery will be difficult and might take longer than its peers. Having recorded the highest growth rates in 2009 and 2010, Albania’s growth in 2011 ranks only the fifth highest after Turkey, Macedonia, Iceland and Kosovo, according to a quarterly report published by the European Commission’s Directorate General for Economic and Financial Affairs.
While Albania’s official unemployment rate and inflation rate at 13.3 percent and 3.5 percent respectively at the end of 2011 are among the lowest in all EU aspirants, the current account deficit at 12.2 percent of the GDP is the second highest after Montenegro’s 19.9 percent.
Non-performing loans, currently at 22 percent are the highest in the region.
Despite having preserved an annual 3 percent growth rate from 2009 to 2011, compared to an average of 6 percent in the pre crisis period, the Albanian economy lags behind almost every EU aspirant, including Bosnia Herzegovina in GDP per capita and purchasing power indicators.
Q3 performance
The Albanian economy continued to grow at a relatively robust pace. In the third quarter of 2012 the economy expanded by 2.7 percent year-on-year, accelerating from a revised 2.1 percent GDP increase in the second quarter. Retail sales recorded a modest growth of 0.2 percent, after having dropped by close to 5 percent on average in the first half of the year, signaling a slight recovery of domestic demand. All economic sectors recorded annual output growth in the third quarter with the exception of construction and transport sectors, which contracted significantly, by 16.5 percent and 11.5 percent year-on-year, respectively.
The growth of total deposits decelerated somewhat to 9.7 percent year-on-year in the third quarter, down from 10.6 percent percent n the previous trimester. In October and November, deposits further contracted by 7.6 percent and 6.9 percent year-on-year, respectively.
Bank lending continued slowing down for a tenth consecutive month. In November the aggregated credit portfolio rose 4 percent year-on-year, compared to 14.8 percent growth rate a year before and 6.4 percent in the third quarter of 2012.
Latest data available for October shows that the ratio for loans and deposits denominated in
Albanian lek represented 39 percent of total loans and 50 percent of total deposits respectively.
Low purchasing power
The statistical office of the European Union, Eurostat, has revised downward Albania’s GDP per capita expressed in purchasing power standards (PPS) ranking the Balkan country on the bottom of the 37-country list on par with Bosnia and Herzegovina. In its latest report, Eurostat ranked Albania’s GDP per capita in PPS at 30 percent of the EU 27 average, down from 31 percent in mid-2012 based on revised purchasing power parities, and the latest GDP and population figures. At 70 percent below the EU 27 average, Albania’s 2011 GDP per capita is also 5 to 22 percent below regional EU candidates Serbia, Macedonia, Montenegro and Turkey and 31 percent below acceding Croatia.
While Albania’s purchasing power stands at less than one-third of the EU 27 average, price levels for consumer goods and services are estimated at 51 percent, showing that the cost of living in Albania is relatively high compared to the small income. A recently released report by Eurostat shows Albania’s total score at 51 percent of the EU 27 average in 2011 is higher than Macedonia’s 45 percent and on par to Bulgaria, both of which have a GDP per capita expressed in purchasing power standards 5 to 14 percent higher than Albania.
