TIRANA, May 28 – The severe financial crisis in neighbouring Greece won’t have serious economic impacts on the Albanian economy, Peter Sanfey, a lead economist at the EBRD told Voice of America in the local Albanian service recently.
Albania has demonstrated flexibility during the global financial crisis and we expect it to demonstrate the same thing towards the situation in Greece, said the EBRD economist. Admitting that that the Greek crisis will have some effects considering the size of Albanian immigrants working in the neighbouring country and remittances they sent to their families in Albania, Sanfey assured the effects will not be serious.
The EBRD economist said the banking system in Albania, including Greek banks is profitable, well capitalized and operates on a market which is still financially developing.
Greek-owned banks in Albania comprise 25 per cent of the country’s banking assets and hold 38 per cent of the loans.
“During the coming years we will see a further development of financial markets in Albania and I am sure Greek banks in Albania will play an important role in this process,” he added.
Asked about the delay in the issue of Albania’s first Eurobond and the raise of its interest rate to 8.5 percent by parliament, the EBRD economist said that for the Albanian government the preservation of the macroeconomic stability, keeping inflation rate under control and management of fiscal deficit were more important than the Eurobond.
According to Sanfey, the Albanian economy is flexible to handle crises because it is less integrated into the global economy compared to regional countries considering the low percentage of imports and exports in the GDP.
The Albanian economy is dominated by small firms which can find ways to handle difficulties and problems which can come across, added Sanfey.
EBRD expects 1.4% GDP growth in 2010
The European Bank for Reconstruction and Development (EBRD) has downgraded Albania’s 2010 Gross Domestic Product (GDP) forecast from 2.0 in January to 1.4 in May. The 2011 forecast is 3.1%
“Albania is the one country in this sub-region that managed positive growth in 2009, but growth is likely to decrease in 2010, reflecting the impact of recent floods, a slowdown both in capital inflows and in remittances as well as slower credit growth,” said the EBRD in its May 2010 economic outlook report.
Albania is particularly vulnerable to a serious Greek downturn, as the majority of remittances into Albania come from migrants in Greece, many of whom work temporarily in seasonal jobs, says EBRD
In the western Balkans, the highest growth rates in 2010, at just above 2 per cent, are likely to be in Macedonia and Serbia. Both countries are aided by a recovery in metals prices, which helps key industries. In the case of Serbia, a major programme of infrastructure development is underway, helping to support growth.
The EBRD is the largest institutional investor in Albania. The Bank is concentrating on developing the private sector and emphasizing infrastructure development as an integral part of business progress.
Meanwhile, the International Monetary Funds forecasts the Albanian economy will grow by 2.3 percent in 2010 and 3.2 in 2011.
