Business Monitor: Albania GDP to grow between 2-3%

TIRANA, Sept. 23 – Real GDP growth in Albania is expected at 2.1 percent in 2013 and at 3.2 percent in 2014, driven by a modest recovery in private consumption and healthy export growth, according to a forecast by prestigious Business Monitor International. However, a more significant recovery will be restricted by the government’s unfavourable fiscal position and weak fixed investment, which will ensure that growth remains below potential for some time to come.
Inflationary pressures will remain subdued over the coming months due to easing agricultural prices and low demand-pull price dynamics. “We expect the National Bank of Albania (BoA) to lower its policy interest rate by 25bps to 3.25 percent by the end of 2013, as low prices allow the central bank to try to stimulate growth through adopting a more dovish monetary policy stance,” says Business Monitor International. Albania’s current account deficit will narrow to 8.6 percent of GDP in 2013 and 8.2 percent in 2014, from 9.9 percent in 2012, as goods exports continue their gradual recovery and sluggish domestic demand restricts import growth. However, a faster correction in the country’s current account will be undermined by weak external demand and Albania’s modest economic recovery through 2014, which should prove supportive of imports.
While Albania has a comparatively low level of trade and financial integration with Western Europe, this will not prevent its economy from the marked deterioration that has taken place in the eurozone. Weak demand in Albania’s main trading partners will prevent exports from delivering a more significant narrowing of the current account deficit in 2013, while subdued domestic demand will ensure that import growth remains restrained over the next few quarters, says Business Monitor.
International financial institutions which expect the Albanian economy to grow between 1.5 to 1.8 percent for 2013 and at around 2 percent in 2014.