Tirana Times editorial
TIRANA, July 12 – Regardless of political debate between the government and the opposition, to a large extend, the fate of the Albanian economy rests in the hands of the global economic forces as much as it does in internal political and economical decisions.
One of the key reasons Albania performed better than most European countries during the earlier stages of the crisis is the relative isolation of the country from the global economic forces — its markets and economy are less integrated in the global economy than those of many other states.
But even with that relative isolation, the renewed Eurozone crisis and Albania’s strong exposure to Greek crisis mean that Albania’s golden days of strong economic growth are gone for a while. This year and the next, Albania can only expect a modest economic growth rate, if we are lucky; a recession if we are not.
The problem is that these modest growth projections assume that the Eurozone crisis will resolve itself in an orderly manner. If the crisis will worsen, Albania’s prospects become that much weaker.
Albania can’t control any of the decisions or forces that will decide the fate of the the Eurozone crisis. The only thing this country can do is to have internal political maturity to make the rights decisions at home to deal with the effects of the external crisis.
First, it needs proper data. The state-run Institute of Statistics, INSTAT, is often accused by independent experts and the political opposition as being unreliable and painting a rosier picture than the reality on the ground due to government pressure. Perhaps a reform that would grant the institution more independence from the prime minister and the government is needed.
Second, the government must take measures to increase consumer and investor confidence in a credible manner, continuing the efforts it has already started.
Third, the upcoming general elections should not be allowed to do further damage to the economy, either by hurting consumer and investor confidence or by irresponsible public spending at the central and local levels, regardless of the fact that the economic concerns are likely to be at the forefront of the debate. Increasing wages and pensions, paying people to attend political rallies, rushing public works like roads and water supply systems to finish in time for the elections – are all things that have given a short-term boost to the economy in previous elections, and there might be an uptick next year as well, but this should be done in a balanced way so it doesn’t hurt long-term and medium-term economic growth.
Options should be carefully reviewed so a pro-growth economic policy is balanced with the need to keep public debt in the right parameters.
The opposition Socialist Party has long made statements about the state of the economy that make things worse than they are in reality, trying to use them for political gain. Now, with an official recession looming, they will finally have more ammunition against the government’s economic policies, in addition the accusations of ill-management of privatizations and corruption.
The irony of it all is that whatever government comes out of the new elections will have to deal with a situation that is the result of the actions the current government is taking. And economic actions take time to manifest. If the opposition manages to get power, two or three years down the road it might have to pay for the sins or good work of the current government and stand accused of not doing enough for the economy, just as it is doing today.
