TIRANA, June 7 – Albania’s economic growth will continue to remain well below pre-crisis levels in the next couple of years when reforms will not go far enough in a number of key areas, constraining growth, UK-based BMI Research, a subsidiary of ratings agency Fitch Group, has warned.
In its latest country risk report, BMI Research expects the Albanian economy to accelerate to 3.1 percent in 2016 and 3.6 percent in 2017 and 2018, slightly below the Albanian government’s more optimistic forecasts of growth ranging between 3.4 percent to 4.2 percent over the next three years.
“The government will struggle to reduce unemployment considerably before the parliamentary elections in 2017. While it will make progress improving the country’s investment climate, reforms will not go far enough in a number of key areas, constraining growth,” says the Fitch subsidiary.
Real GDP growth will be driven mainly by fixed investment, as the country’s business climate improves and easing credit conditions begin to pass through to the real economy, says the report.
The Trans Adriatic Pipeline bringing Caspian gas to Europe and a major hydropower plant by Norway’s Statkraft are the two biggest foreign direct investment projects under construction in Albania with a major impact on energy diversification and employment.
Albania’s annual rate of inflation will not reach the central bank’s 3 percent target until 2017, and the policy rate will not increase until the following year. Gradually rising inflation will reflect a pickup in global oil and food prices from the second half of 2016, rather than recovering aggregate demand, says the Fitch subsidiary.
BMI Research says the migrant crisis and the Albanian route to reach Western Europe remains a key risk after border fences built by other countries, although Albania has faced no migrant wave up to now despite thousands of migrants trapped in neighboring Greece.
