The latest report published by the European Commission shows the 2.3 percent shrink in the third quarter of 2013 was a severe blow for the Albanian economy which was the only EU-aspirant to register negative growth during this period
TIRANA, Jan. 13 – After handling the global crisis impacts better than its EU aspirant competitors in the 2009-2012 period, the Albania economy is suffering with the poorest growth rates among eight candidate and potential candidate countries. The latest report published by the European Commission shows the 2.3 percent shrink in the third quarter of 2013 was a severe blow for the Albanian economy which was the only EU-aspirant to register negative growth during this period.
EU candidates Macedonia, Iceland, Montenegro, Serbia and Turkey registered positive growth rates of 3.3 percent to 4.9 percent in the third quarter of the year. No data were available for EU potential candidates Bosnia and Herzegovina and Kosovo, but the European Commission’s Economic and Financial Affairs Directorate-General says economic activity in Bosnia has recovered after the 1.1 shrink in 2012 while Kosovo is forecast to grow by 2.5 percent in 2013.
The report describes Albania’s 2013 performance as an exception to the positive growth trend in the region.
“The growth performance of the pre-accession countries improved in 2013. GDP growth turned positive in the four Western Balkan economies that had experienced recession in 2012 and gathered pace in the other countries where it had slowed down. A main exception to this pattern is Albania where growth which had slowed down in the second quarter (to a revised 1.7%) contracted by 2.3% in the third one,” says the report.
The continuing sluggishness of private demand, exacerbated by tight lending conditions and falling remittances, weighed heavily on third quarter growth, offsetting the fading fiscal stimulus. Albania’s real GDP contracted by 2.3 percent in annual terms, as only agriculture registered growth percent.
Albania and Serbia have the highest rate of non-performing loans with 24.3 percent and 21.1 percent respectively, leading to credit constraints that weigh on the corporate sector and on the reallocation of resources towards tradables.
From best to poorest performer
At 1.6 percent in 2012, Albania registered its lowest annual GDP growth rate since the collapse of the notorious pyramid schemes in 1997, and almost half of the average growth rate during the global crisis year from 2009 to 2011. However, the Albanian economy continued remaining one of the best performing among EU-aspirants despite its growth rate slowing down even compared to the onset of the global crisis in 2009 when at 3.3 percent it became one of the few regional economies to register positive GDP growth rates.
A previous quarterly report published by the European Commission Economic and Financial Affairs Directorate-General shows the Albanian economy performed better than most aspiring EU countries expect for Turkey and Kosovo and was on par with Iceland in 2012.
Macedonia, Montenegro, Bosnia and Herzegovina, Serbia and Croatia plunged into recession in 2012 after having recovered in 2011.
While Albania’s unemployment rate at 13.3 percent, inflation rate at 2 percent, the budget deficit at 3.4 percent of GDP are among the best in the region, the current account balance at 10.5 percent of the GDP and the ratio of non-performing loans at 24 percent are the highest among the eight EU candidate and potential candidate countries. Albania’s public debt at 61.5 percent of the GDP at the end of 2012 was the highest in the region along with Serbia at around 60 percent.
While Croatia has already joined the EU, only Albania, Bosnia and Herzegovina and Kosovo remain potential EU candidates with all others having already obtained EU candidate status.
Albania’s GDP per capita expressed in purchasing power standards remained unchanged at 30 percent of the EU-28 in 2012, ranking on the bottom of 39 country-list, according to a report published by Eurostat, the statistical office of the European Union.
The report measuring GDP per capita in purchasing power standards, an artificial currency unit that eliminates price level differences between countries, shows that at 30 percent of the EU-28, Albania’s GDP per capita ranks better only compared to peer EU potential candidate Bosnia and Herzegovina 29 percent but lags behind four other EU candidates Macedonia, Serbia, Montenegro and Turkey whose GDP per capita ranks from 35 percent to 54 percent of the EU 28.
