Data show Albania’s GDP based on purchasing power parity (PPP) per capita is expected to rise to 7,780 USD in 2011, up from 7,468 USD in 2010, remaining the lowest among CEE countries
TIRANA, Dec. 13 – Despite having one of the highest growth rates during the past decade and remaining one of the few countries managing to register positive growth even in global crisis year of 2009, Albania’s purchasing power is the lowest among 14 Central and Eastern Europe countries. The findings are revealed in the latest World Economic Outlook database published by the International Monetary Fund (IMF).
Data show Albania’s GDP based on purchasing power parity (PPP) per capita is expected to rise to 7,780 USD in 2011, up from 7,468 USD in 2010, remaining the lowest among CEE countries. The PPP, an artificial currency unit that eliminates price level differences between countries, shows Albania lags behind neighbours Macedonia and Montenegro, already EU candidate countries, and ranks even worse compared to Bosnia and Herzegovina, which remains hopeful to get the candidate status just as Albania.
The PPP for 2011 among the 14 CEE countries varies from a low of 7,780 USD in Albania, 8,174 USD in Bosnia to 10,369 USD in neighbouring Macedonia and 11,228 in Montenegro.
Poland and Hungary top the list with an average of 20,000 USD expressed as GDP based on PPP per capita. This indicator would probably be worse only in Kosovo but the IMF report has not made available data on the neighbouring country.
The Purchasing Power Standard (PPS) is an artificial currency unit that eliminates price level differences between countries. Thus one PPS buys the same volume of goods and services in all countries. This unit allows meaningful comparisons of economic indicators across countries. Aggregates expressed in PPS are derived by dividing aggregates in current prices and national currency by the respective Purchasing Power Parity (PPP).
Government expects the GDP per capita to grow to 3,092 Euros in 2012 up from 2,930 Euros in 2011.
Eurostat
Albania’s price levels for consumer goods and services are among the lowest in Europe but remain high compared to the country’s revenues. A recent report published by Eurostat, the statistical office of the European Union, showed price levels for consumer goods and services in Albania during 2010 were at 50 percent of the EU 27 average, the second lowest in the 37 country list after neighboring Macedonia.
Food and non-alcoholic beverages are priced at 70 percent of the EU 27 average, the same as EU members Poland, and higher compared to Bulgaria, Romania, Macedonia and Serbia.
Latest Eurostat data show Albania’s GDP per capita dropped to 2,661 Euros in 2009, down from 2,784 in 2008, remaining better only compared to Kosovo which registered 1,790 Euros. Bosnia and Herzegovina, which is also benefiting from visa free travel in the Schengen area, had a GDP per capita at 3,192 Euros compared to the EU 27 average of 23,500 Euros.
Albania’s Gross Domestic Product (GDP) per person expressed in purchasing power standards (PPS) in 2010 was less than one third of the EU-27 average and remains even below regional competitor Bosnia and Herzegovina, according to Eurostat.
Data show Albania’s GDP per inhabitant in PPS climbed from 23 percent of the EU-27 average in 2007 to 26 percent at the end of 2008 before reaching 27 percent in 2009 and 29 percent in 2010.
Albania’s GDP in 2009 dropped to 8.5 billion Euros, down from 8.8 billion in the previous year reflecting the effects of the global crisis.
Meanwhile, Albania’s price level index (PLI) for food and non-alcoholic beverages is at 72 percent of the EU 27, considerably more expensive compared to neighboring Macedonia, whose index was at 52 percent, and even some EU members such as Poland, Romania, Bulgaria, according to Eurostat.
Albania’s index in this category falls between Serbia and Lithuania, where food and non-alcoholic beverages are at 70% and 74% of the EU average respectively, concluded a Eurostat survey comparing price levels in 37 European countries for 2009.
PPS downgraded
In a newly revised report issued this week Eurostat, the statistical office of the European Union, lowered Albania’s GDP expressed in purchasing power standards (PPS) to 28 percent of the EU 27 average down from 28 percent earlier this year. Albania’s PPS failed to make progress in 2010, standing at the same level to 2009 and only 2 percentage points compared to 2008.
Meanwhile, Albania’s Actual Individual Consumption (AIC), often seen as a more preferable measure, stands at 31 percent of the EU 27, the same to 2009. The Actual Individual Consumption (AIC) consists of goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations. In international volume comparisons of consumption, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services, differs a lot across countries.
Public Debt
Albania’s public, currently at the legal limit of 60 percent of the GDP is the second highest among the 14 CEE countries, remaining lower only compared to EU member Hungary whose public debt is estimated at 76.1 percent of the GDP for 2011.
The high public debt level, its relatively high short-term share and the considerable amount denominated in foreign currency makes Albania one of the most endangered countries in Emerging Europe, the International Monetary Fund warned in its latest report.
In its October regional economic outlook, the IMF warns Albania is experiencing deterioration in reducing vulnerabilities to prevent financial turmoil mainly because of the fact that the public debt, currently close to the ceiling 60 percent of the GDP, is the highest in the region and lower only compared to Hungary’s 80 percent among Emerging Europe countries.
“It is imperative that these vulnerabilities be reduced further. Countries should not take solace in the fact that spreads have remained relatively low so far. Past experience in countries with significant public finance problems shows that spreads can remain low until a very late stage,” says the IMF.
Albania’s short-term public debt, (for one year or less) is estimated at 37 percent of the GDP, up from 22 percent in 2007, standing at more than four times above the average of emerging market economies. Meanwhile, Hungary’s short-term public debt has reduced to around 13 percent compared to around 35 percent in 2011.
The International Monetary Fund has warned Albania’s public debt, currently at the legal limit of 60 percent of the GDP, will rise to 64 percent by 2016 under current fiscal policies. Albania’s public debt is approaching the 60 percent of GDP statutory limit, a relatively high level compared with emerging markets (average of 47 percent) and regional peers. With an average interest of some 6 percent, and notwithstanding a still large share of concessional external debt, debt servicing cost exceeds 3 percent of GDP or 15 percent of tax revenue, says the IMF.
Revenues, inflation, unemployment
The IMF report expects general government revenues for Albania to rise by only 6 percent or 19.3 billion lek this year, when government has already made a mid-year budget cut and has scheduled a new for this fiscal year. As a percentage to the GDP general government revenues are expected to experience a slight deterioration by 0.18 percent dropping to 25.65 percent of the GDP.
As far as inflation rate is concerned, at an expected 3.9 percent for 2011 remaining within the central bank’s3ѱ target , Albania’s Consumer Price Index is among the lowest in the CEE region for 2011 where levels range from 3.1 percent in Montenegro to 11.2 percent in Serbia
At 11.5 percent, Albania’s unemployment rate is one of the lowest in the region, standing far better than Macedonia’s 32 percent or Bosnia and Herzegovina’s 27 percent. The official data published by INSTAT, which IMF refers to, calculate all people living in rural areas and possessing land as self-employed, a methodology often criticized by NGOs and the experts as artificially lowering unemployment rates estimated at 30 percent by labour unions..
The 14 countries covered in the IMF Central and Eastern Europe report are Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Kosovo, Latvia, Lithuania, FYROM, Montenegro, Poland, Romania, Serbia, Turkey.
