Vienna Institute downgrades Albania’s growth

TIRANA, April 3 – The Vienna Institute for International Economic Studies has downgraded Albania’s GDP growth forecast as the Eurozone crisis escalates.
“For Albania, we expect GDP growth of 1.9% in 2011 and 2.2% in 2012 respectively and a stronger increase to 2.6% in 2013 and 3.4% in 2014, the latter due to the election cycle and induced populist government spending. The assumption is that the government has no problems financing fiscal expansion, that heavy rainfall in early 2012 will bring the vital electricity production back to normal and that export growth will continue despite the eurozone crisis (also with the help of further increasing crude oil export production capacities); remittances will tend to stabilize or at least fall at a slower pace as further unemployment in Greece might rather hit the public sector, where Albanians are not employed. Obviously, the risks are on the downside, very much so.” says the Institute.
Citing worsening business confidence and the downward trend in remittances flows from the Albanian Diaspora in crisis-hit Greece and Italy, the Vienna Institute for International Economic Studies earlier downgraded Albania’s GDP growth forecast to 2.8 percent for 2011 and 3.2 percent for 2012.
In its latest review of the macroeconomic and fiscal framework, made on Jan. 18, government lowered its GDP growth forecast for 2011 to 3 percent, down from 3.9 percent in late 2011 and 5 percent in early 2011, but left its growth expectations for 2012 to 2013 unchanged at 4.3 and 5 percent, respectively, the same to the review made in Nov. 2011. Although claiming to have drafted a more conservative and realistic budget for 2012, when compared to forecasts made by the world’s most prestigious financial institutions the gap is wider than ever