TIRANA, Oct. 13 – The International Monetary Fund (IMF) expects the Albanian economy to grow by 2.6 percent this year and 3.2 percent in 2011, almost twice less compared to government’s GDP projections.
According to IMF’s new World Economic Outlook report published last week, Albania will return to 5 percent GDP growth rate only by 2015.
However, Albania’s GDP projection for 2010 at 2.6 percent is better compared to almost all regional emerging and developing economies except for Kosovo, Montenegro and Turkey whose economies are expected to grow by 4.6%, 3.4%, and 7.8% respectively.
Data show Albania and Kosovo were the only two countries not to register negative growth rates in 2009, the peak of the global financial crisis, registering positive growth rates of 3.3 percent and 4 percent, respectively.
The average real GDP growth for emerging and developing economies in central and Eastern Europe is expected to turn back to 3.7 percent in 2010 after a negative 3.6 growth rate registered last year.
As far as consumer prices are concerned, the IMF’s projections for 2010 and 2011 are 3.4 and 2.9 percent, respectively, in line with the Albanian central bank’s the target of 3ѱ percent.
Meanwhile, the current account balance, measuring the difference between the nation’s total exports of goods, services and transfers and its total imports of them, is expected to drop to minus 9.2 percent in 2010 and minus 4.9 by 2015, down from a record 15.2% in 2008.
“Many emerging and developing economies are again seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession,” says the IMF in its summary report.
Strengthened domestic demand helps emerging market economies maintain growth in the face of lower exports. A number of policies are required to support these rebalancing acts. Key emerging economies will need to further develop domestic sources of growth, with the support of greater exchange rate flexibility.
Although many emerging economies are seeing high growth again, they continue to rely significantly on demand from advanced economies.
Emerging economies that relied heavily on demand from these economies will therefore have to rebalance growth further toward domestic sources to achieve growth rates similar to those before the crisis, helping the required external rebalancing, says the report.
Govt optimistic economy to grow more than 4% in 2010
Government is confident the country’s good performance in the tax and customs offices will make the Albanian GDP grow by more than 4 percent this year, up from 3.3 percent in 2009.
Speaking at a press conference last month, Finance Minister Ridvan Bode said the tax and customs administrations had collected 207 billion lek (around 2 billion dollars) in the first eight months of this year, exceeding the target by 1 billion lek.
“According to our assessments and the macro-fiscal framework, we expect an economic growth above 4 percent. If the growth rates continue the same as in August, the growth could be higher,” said Bode.
He assured the government would respect the budget deficit levels.
Government has recently cut spending by 39 billion lek (390 million dollars) for the rest of this year in an effort to keep public debt levels at 59.5 percent of the GDP and reduce budget deficit to 3.1 percent by the end of the year, down from a record 7 percent at the end of last year.
Government has also lowered its GDP growth forecast to 4.1 percent, down from an expected 5.5 percent at the beginning of this year, which is still almost twice higher compared to what international institutions such as IMF and the EBRD expect in 2010.
The Albanian economy saw a significant decline in its growth rate in 2009, from 7.9 per cent in 2008 to an estimated 3.3 per cent in 2009, but remained one of the few European economies which did not suffer a recession.
The European Bank for Reconstruction and Development (EBRD) says Albanian GDP will grow by 1.4 percent this year while the IMF expects 2.3 percent in 2010 and 3.2 in 2011. Meanwhile, government expects a 4.1 percent growth after budget review.
