At only 1.1 percent during the second quarter of 2013, Albania’s GDP registered the second lowest growth rate among candidate and potential candidate countries, better only compared to Serbia
TIRANA, Although remaining one of the best performing enlargement economies in the global crisis years of 2009 to 2012, the Albanian economy is showing sluggish signs of recovery and has been overtaken by most EU aspirants in the first half of this year, shows a European Commission report. At only 1.1 percent during the second quarter of 2013, Albania’s GDP registered the second lowest growth rate among candidate and potential candidate countries, better only compared to Serbia.
Montenegro, Macedonia, Iceland, and Turkey registered growth rates of 3.4 to 4.2 percent in the second quarter of 2013, according to a quarterly report by the European Commission’s Economic and Financial Affairs Directorate-General. Serbia registered the lowest growth rate of 0.2 percent while no data are made available for Bosnia and Herzegovina and Kosovo.
In the global crisis of 2009 to 2012 the Albanian economy grew by an average of 3 percent annually and was one of the few pre-accession countries to register positive growth rates along with Turkey and Kosovo.
“Contrary to some expectations, annual real GDP growth decelerated in the second quarter to 1.1 percent from 1.7 percent in the previous three months. The long-ailing construction sector, boosted by public investment spending, staged an impressive turnaround and expanded by 16 percent year-on-year, after contracting in the preceding five quarters,” says the report.
Commenting on the new 2013-2017 programme of the Socialist Party-led left wing coalition, the European Commission report says “The government programme for 2013-2017 recognises the limitations of the development model based on a remittances-fuelled construction boom and raw material exports, and aims to shift the focus to new sources of growth by identifying manufacturing, energy, tourism and agribusiness as priority areas. The programme also pledges fiscal discipline and the payment of accumulated public arrears. It also envisages a progressive personal income tax and the establishment of an agricultural development bank.”
Continuing weaknesses on the revenue side and pre-election spending increases left their mark on the budget. In the period January to August, total revenues were 7.2 percent below the initial plan and were even 3.8 percent lower than in the same period last year, on account of significantly underperforming revenues from direct taxes.
In 2012 Albania handled crisis better
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.
The 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.
In late 2012, the statistical office of the European Union, Eurostat, 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 new EU member Croatia.
