TIRANA, Nov. 23 – External developments associated with financial volatility and slow growth in the EU may adversely impact Albania’s growth and poverty prospects through reduced remittances, exports, investment and consequently economic growth, says the World Bank in its latest November update on Europe and Central Asia Economic.
Trade exchanges with the European Union, especially top trading partners Italy and Greece, account for more than two-thirds of the country’s total, with exports severely affected by the Eurozone crisis and the slump in international commodity prices, hitting Albania’s key oil and mineral exports.
The World Bank says uncertainties over next year’s general elections could also affect growth recovery and poverty reduction.
“Domestic factors such as fiscal pressures or increased business uncertainty associated with next year’s elections could also slow down progress. However, faster than currently expected improvements in the business climate and reforms to address high non-performing loans could further strengthen private investment and consumption over the medium term. Further gains in poverty reduction hinge on sustained and faster economic growth that translates into more and better jobs, particularly given the downward trend of remittances,” says the report.
The World Bank expects the Albanian economy to continue expanding in the next three years, mainly driven by private investment and a recovery in consumption.
Growth is projected to reach 3.2 percent in 2016 and 3.5 percent in 2017 and 2018, in forecast which are 0.2 to 0.5 percent compared to what the Albanian government expects.
As the economy continues to strengthen and labor markets improve, further gains in poverty reduction are expected. Poverty, measured at the moderate poverty line (US$5/ day, 2005 PPP), is expected to decline to 45.3 percent in 2016, to 44.5 percent in 2017 and even further to 43.7 percent in 2018, says the report.
