Jan. 21 events not to have major impacts, report

TIRANA, March 29 – In Albania the political stalemate after clashes during a violent anti-government demonstration in January 2011 is not expected to have a major economic impact in the short term, the Vienna Institute for International Economic Studies says in a recently published report. However, if the political system is stymied by personal animosities among the country’s leading politicians, this might prove to be a major stumbling block on the path to EU membership and subsequent EU transfers and integration into European production networks. For the period 2011-2013, the Vienna Institute expects a gradual increase in the GDP growth rate. The forecast hinges on further recovery of the European economy and governmental stimulus of domestic demand.
The Vienna Institute expects the Albanian economy to grow by 4 percent in 2010, in line with government’s expectations, but says the GDP growth will drop to 3.2 percent in 2011 compared to government’s projection of a 5.5 percent growth. Experts of this institute expect deterioration in the country’s unemployment rate which is expected to climb to 15 percent in 2011 and an increase in the current account deficit of up to 16 percent by 2013 when the Democratic Party’s second mandate expires.
As far as macro-economic developments are concerned, the 2011-2013 mid-term budget government has approved foresees to lower the country’s high public debt levels currently at 59.5 percent of the GDP to 54 percent by 2013. The GDP growth rate is also expected to increase to 6.2 percent, up from 5.5 percent in 2011 and 6.1 percent in 2012.
Inflation rate is expected to remain at 3 percent, meeting the central bank’s target band of 3 Ѡ1 percent.
Meanwhile, the GDP per capital is expected to climb to 495,00 lek (4,950 dollars) by 2013, up from an expected 3,844 dollars in 2010. The unemployment rate in the next three years is expected to drop to 9.8 percent, down from 13.6 in 2010.
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.
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, the IMF and the EBRD project for the Balkan country.