Failure of Albpetrol’s privatization, droughts affecting hydro-electricity generation and endemic corruption are considered downward risks
TIRANA, March 26 – The Vienna Institute for International Economic Studies expects the Albanian economy to accelerate to 2.8 percent in 2013, up from an estimated GDP growth rate of 1 percent in 2012, citing downward risks in the failure of strategic privatizations, shortage of electricity supply and what it describes as endemic corruption.
The forecast by the Vienna Institute is one of the highest among regional countries except for Kosovo and Turkey. The forecast is slightly higher compared to estimates of 1 to 2 percent by international financial institutions such as the World Bank, the IMF and the EBRD, and in line with the Albanian government projection of 3.1 percent. The Vienna Institute expects the inflation rate to climb to 4 percent in 2013, which is the ceiling set by the country’s central bank, and the current account deficit to climb to 14.1 percent of the GDP, up from 10.4 percent in 2012.
“In Albania, we expect stronger economic growth in 2013 based on a substantial increase in public wages and infrastructure investment boosting up aggregate demand. A similar rate of growth could be also maintained in the following years of 2014 and 2015 given an improvement of economic sentiment throughout Europe. However, there are considerable downward risks. A failure of the Albpetrol privatization could endanger the financing of fiscal expansion and infrastructure investments. Also another drought could cause further shortage in the electricity supply, which apart from endemic corruption, is one of the major obstacles to more FDI in Albania in the medium run,” says the Vienna Institute.
The Albanian government says it has invalidated a record staggering bid worth Euro 850 million on the privatization of Albpetrol oil firm after the winning bidder, Albanian-led Vetro Energy consortium, failed to pay the financial guarantee leading to the finalization of the contract.
The energy situation, overwhelming dependant on hydro-electricity generation, now seems to have improved after heavy rainfall in the past two months increasing water levels in the country’s hydropower plants to their maximum levels.
