“The Albanian economy enters the second half of 2013 with a slow economic growth below its potential, but with a generally solid and improving economic and financial stability,” says the central bank
TIRANA, Sept. 2 – Albania’s 2013 economic growth is expected to only be slightly higher compared to 2012 when at 1.6 percent Albania registered the lowest growth rate since the collapse of the notorious pyramid schemes in 1997, and half of the average of 3 percent growth rate from 2009 to 2011. The forecast, made by Albania’s central bank in its monetary policy report for the second quarter of 2013, is in line with international financial institutions which expect the Albanian economy to grow between 1.5 to 1.8 percent compared to government’s projection of a 3.1 percent growth for 2013.
“The Albanian economy enters the second half of 2013 with a slow economic growth below its potential, but with a generally solid and improving economic and financial stability,” says the Bank of Albania in its report, adding that future prospects will depend on global and European developments as well as domestic economic policies and the implementation of structural reforms.
“In the mid-term, the base scenario of the Albanian economy is that of slow economic growth, but with improving parameters of the country’s economic and financial health, declining risk premiums and lower financing costs. Promoting internal demand, its orientation toward productive activities, as well as the increase of the competitiveness of Albanian products in global markets will be the key determinants of the long-term economic growth. They will depend on a large scale on the acceleration of reforms at a macro and microeconomic level but even the preservation of economic and financial equilibrium in the mid-term.”
The Bank of Albania forecasts the Albanian economy will continue suffering from low aggregate demand in 2013 and in a mid-term prospect. The slow economic growth will reflect low inflationary pressure leaving room for easy monetary policy. The central bank also appeals for careful planning and implementation of the state budget considering that budget revenue will be under pressure by slow growth. Demand for new loans will also remain low. However, loans to the private sector are expected to increase in the first half of 2014 positively contributing to demand and production.
“Economic growth in 2013 is expected to be slightly higher compared to 2012 mainly driven by exports and public spending while consumption and private investments are expected to remain poor,” says the central bank, adding that the banking system remains liquid, well-capitalized and profitable.
Fuelled by a double digit increase in post and telecommunications and in industry, the Albanian economy grew by 1.7 percent year-on-year in the first quarter of the year, registering one of the lowest first-quarter performances since the onset of the global crisis in 2009, according to the latest report by the country’s state Institute of Statistics,
Last July, Albania’s central bank cut the key interest rate by another 0.25 percentage points to a historic low of 3.5 percent as previous consecutive cuts in the past two years are proving inefficient to boost lending, consumption or investments.
