TIRANA, Jan. 25 – Government says the 3.6 percent GDP growth registered in the first three quarters of 2010 compared to the same period in 2009 makes the Albanian economy the best performing in the region and the 4.1 percent growth target easily achievable. This was confirmed on Tuesday by Finance Minister Ridvan Bode who unveiled in a press conference the 2010 performance and the 2011 objectives.
“The Albanian economy demonstrated that it remained completely unaffected by the global crisis pressures and with an utterly positive trend during 2010,” said Bode, referring to a European Commission report on candidate and potential candidate EU countries published in January 2011. However, referring to the growth rates registered in first three months of 2010, minister Bode calculated the first quarter growth at 2.5 percent and not 2 percent as reported by the country’s Institute of Statistics.
According to him, last year’s growth was mainly based on the boom in exports which were 60 percent higher during the first 9 months of 2010 year-on-year.
Government said Albania’s first ever Eurobond of 300 million euros issued at the end of October 2010, and the good performance of tourism kept the exchange rate of lek against the two foreign currencies stable. Meanwhile, the inflation rate is estimated to have increased by 3.6 percent compared to 2009, remaining within the central bank’s 3 ѱ target, up from 2.3 percent in 2009.
Developments in the banking sector were also described as positive with deposits up 17.4 percent in the first 11 months of 2010 and lending growing by 9.12 percent.
Despite significant budget cuts in July 2010, government fulfilled only 97.4 percent of its revenue targets which registered 324 billion lek or 9 percent more compared to 2009. The customs administration, which collected 13.4 percent more than in 2010 played a key role.
Asked if Albania would issue another Eurobond this year, Bode said government had not planned to enter global financial markets again after last year bond to repay a costly syndicated loan government took to finance the Durres-Kukes road linking Albania to Kosovo.
He said Albania would meet public investment needs under long-term loans at low interest rates by international financial institutions.
“The financial resources for a 5.5 percent GDP growth in 2011 exist and are completely achievable,” said Bode.
Bode announced government was carefully examining to rely on other country’s examples to impose the warned higher taxes on mobile companies and banking services considering the relatively higher fees they charge compared to regional and even some EU countries.
Earlier this month, Prime Minister Berisha said his government would move this year to raise taxes for mobile phone companies and banks charging unjustifiable high fees and tariffs on Albanian consumers.
Assuring of no new tax increases during 2011, Bode said there will be small regulations which do not intend to increase the tax burden such as the customs duty on garments because of increased purchases abroad following the visa liberalization.
Jan-Sept performance
After moderate growth during the first half of 2010, the Albania economy returned to high growth rates in the third quarter somehow overcoming the global crisis effects present since the beginning of 2009. Latest INSTAT data show the country’s GDP in the third trimester of 2010 grew by 4.9 percent year-on-year and 1.6 percent compared to the second quarter.
Industry, transport, services, trade and agriculture were the drivers of the economic expansion while the construction and post-telecommunication continued suffering registering negative growth rates.
After shrinking by 0.8 percent in the last quarter of 2009, the economy managed to return to positive rates, registering year-on-year growth rates of 2 percent in the first quarter of 2010 and 3.3 percent in the second quarter.
The poor performance after the 3.3 percent GDP growth in 2009, when Albania became one of the few economies to register positive growth in global crisis year, was first of all affected by the sharp shrink in the construction sector, 29 percent year-on-year in the second quarter, and the deterioration in the post-telecommunications market, whose activity fell by 2.6 percent during the same period.
Under the newly approved 2011 budget government hopes the economy will return to a 5.5 percent growth, which is still almost twice higher compared to what international financial institutions such as the World Bank and the EBRD project for the Balkan country.
The high public debt levels currently at a record 59.5 percent of the GDP remains a key challenge. It is expected to lower by only 0.5 percent in 2011.
