TIRANA, Jan. 6 – Both consumption and private investments, two of the key drivers of the country’s growth, registered moderate recovery in the second half of 2014, hinting the sluggish growth in the first half of the year could have accelerated in the third and final quarters of the year.
Data published by state statistical institute INSTAT and the Finance Ministry show both consumption measured by the value added tax and private investments measured by the imports of machinery and equipment registered double digit growth rates of around 13 percent in 2014.
VAT which is levied at a fixed 20 percent rate on almost all products and services grew by 14 percent in the first 11 months of 2014, according to Finance Ministry data.
Meanwhile, imports of machinery, equipment and spare parts were up by 13 percent compared to the same period in 2013, leading the import list with a total of around 92 billion lek (Euro 646.6 million).
“Economic activity is estimated to have improved in the second half of 2014, supported by the recovery in internal demand. Financing conditions have also improved fuelled by consecutive cuts to the key interest rate, supporting both the increase in consumption and private investments in the country,” says the central bank in its latest meeting of the supervisory council which decided to keep the key interest rate at a historic low of 2.25 percent.
Top trade partners Italy and Greece escaping recession and the start of the Trans Adriatic Pipeline construction are expected to have a major impact on the Albanian economy in 2015 when government and international financial institutions expect a recovery to 3 percent after sluggish GDP growth rates of 1 to 2 percent in the past three years.
Albania’s prospects have in particular improved as top trade partner Italy is heading toward recovery and Greece has escaped 6-year recession.
The Albanian economy closed another difficult year in 2014 although growth is estimated to have slightly accelerated to 2 percent, up from 1.4 percent in 2013 and only 1 percent in 2012, which was the worst year since the collapse of the notorious pyramid investment schemes in 1997.
Prospects for 2015 appear slightly more optimistic as both government and international financial institutions expect growth to proceed to 3 percent which was the average growth rate of the 2009-2011 period when Albania was one of the best performers in the region, but half of the pre-crisis decade of 6 percent.
