TIRANA, May 12 – London-based European Bank for Reconstruction and Development expects the Albanian economy to grow by 3.3 percent in 2016 and accelerate to 3.5 percent in 2017, slightly lower compared to forecasts by the Albanian government and the IMF.
In its latest Regional Economic Prospects report, the EBRD says GDP growth is likely to accelerate to 3.3 percent in 2016 on the back of a revived investment cycle, in particular in the energy sector, including the start of major construction work on the Trans-Adriatic gas Pipeline (TAP).
The EBRD warns fiscal challenges remain significant but the IMF programme remains on track after agreement at staff level on the seventh review was reached in March 2016.
“The Albanian economy performed steadily in 2015, successfully withstanding the impact of severe flooding in the south of the country in February and recording 2.6 per cent growth for the year as a whole. In September 2015 the government initiated a high-profile campaign to reduce informality in the economy, and some results are already evident in terms of increased business registration,” says the EBRD.
Among ten South-eastern European countries, Albania’s expected 2016 and 2017 growth will be among the region’s highest.
The London-based financial institution warns there are major uncertainties in neighbouring Greece in the short-term, which could have implications for Albania. Greece, the host of some 500,000 Albanian migrants, is the traditional second largest trading partner for Albania, but its six-year recession sharply affected trade exchanges and remittances.
“We expect modest growth to resume in the second half of 2016 once clarity on the future direction of economic policy and on Greece’s debt sustainability is obtained, and provided debt repayments to international creditors are made on time. This would still leave GDP growth slightly negative in 2016, largely because of base effects, but more robust growth (2.4 per cent) is projected for 2017 as investment picks up and confidence returns to the economy,” says the EBRD about Greece.
The EBRD had earlier warned “Albania’s strong trade, investment and remittance ties to Greece and Italy, both of which face continued economic gloom, are likely to continue to constrain growth and the high level of public debt will limit the room for fiscal manoeuvre.”
Since the start of its operations in Albania, the EBRD has invested almost €1 billion in over 70 projects in various sectors of the country’s economy.
