The forecasts are slightly lower compared to the Albanian government and the IMF which expect the economy to recover to 2.1 percent in 2014, up from 0.4 percent in 2013 and accelerate to 3.3 percent in 2015.
TIRANA, May 14 – Albania will see a modest upturn in 2014-2015 with growth of 1.7 and 2.0 per cent, respectively supported by a new agreement with the IMF and World Bank assistance in dealing with high levels of non-performing loans and weak credit growth, says London-based EBRD in its latest Regional Economic Prospects report.
The forecasts are slightly lower compared to the Albanian government and the IMF which expect the economy to recover to 2.1 percent in 2014, up from 0.4 percent in 2013 and accelerate to 3.3 percent in 2015.
“Albania’s economic growth was minimal in 2013, reflecting a combination of weak domestic demand and corporate balance sheets, as well as difficulties in neighbouring EU countries (Italy and Greece) which have contributed to a sharp drop in remittances in the past year. Public debt has risen to 70 per cent of GDP and financial sector vulnerabilities are evident with NPLs of around 23 per cent of total loans,” says the EBRD report. “The government has signed a new agreement with the IMF and, with the support from the World Bank, has started to clear public arrears to companies, which had surged to more than 5 per cent of GDP. This should help to alleviate the problems of high NPLs and weak credit growth, thus contributing to a modest upturn in growth in 2014 and 2015.”
Differently from 2009-2012 when Albania was one of the best performers, at 0.4 percent in 2013, Albania registered the lowest among eight South-eastern European countries. The EBRD expects growth in 2013 and 2014 to slightly remain below the SEE’s region of 2.2 and 2.4 percent respectively.
Albania’s public debt at 70 percent of the GDP and non-performing loans at 23.2 percent are the highest among the eight SEE EBRD countries of operation which include Bosnia and Herzegovina, Bulgaria, Macedonia, Kosovo, Montenegro, Romania and Serbia.
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.”
The EBRD is one of the largest investors in the private sector in Albania. Since the beginning of its operations in Albania, the EBRD has invested over Euro 700 million in various sectors of the country’s economy, mobilising additional investments of more than Euro 2 billion from other sources of financing.
The economies of south-eastern Europe are continuing to recover, but growth this year and next will remain modest, and a number of countries will feel the adverse impact of the crisis in Ukraine and Russia. The latest economic report from the EBRD predicts average growth across south-eastern Europe of 2.2 per cent in 2014 and 2.4 per cent in 2015. The EBRD report says negative spill-overs from the political tensions have so far been largely contained to the neighbourhood of Russia and Ukraine, although several central and south-eastern European economies will be affected.
