Expert considers EBRD’s forecast on Albania realistic

TIRANA, Nov. 2 – While the European Bank for Reconstruction and Development has made the most pessimistic prediction for the Albanian economy, Zef Preci, the director of the Albanian Center for Economic Studies, sees reality in the forecast by the international financial institution which expects the Albanian economy to grow by 1.9 percent for 2011 and 1 percent for 2012.
“The EBRD forecast reflects a decrease in domestic demand, a slowdown in lending, and the cost of money in a situation when the national currency, lek, is depreciating, the decrease in migrant remittances and finally the cut in public investments. All these show that Albania will face a much slower economic growth in the next three years,” said Preci speaking to Deutsche Welle this week.
The reviewed EBRD forecast is the most pessimistic one made for Albania– lower than the IMF’s 2.5 percent for 2011 and 3.5 percent in 2012, the World Bank’s 3.7 percent for 2011 and the government’s 4 percent for this year and 5 percent in the next couple of years.
The economic expert says the Eurozone debt crisis, with migrants sending less remittances, the public debt at the legal limit of 60 percent of the GDP, also add to the situation.
Increasing productivity and creating new jobs are seen as necessary measures to curb the crisis effects.
“All policies in favour of creating new jobs and developing businesses reduce the crisis effects. This is shown by global experience in handling economic crises. The Albanian economy is characterized by the private sector at 80 percent. This means that lending to the economy is necessary as it creates more chances for employment but also tax contribution,” added Preci.
In its October Regional Economic Prospects report, the EBRD reiterated that Albania remains heavily exposed to the troubled Greek economy.
“Albania experienced a slowdown in economic activity in the past quarter largely due to the weak performance of its key EU markets, Greece and Italy. Albania’s strong trade, investment and remittance ties to these countries are likely to continue to hold back growth in the coming year,” said the report.