TIRANA, Jan. 18 – The World Bank expects the Albanian economy to grow by 3 percent in 2010 and 3.7 in 2011, the same compared to the International Monetary Fund but almost twice less compared to government projections. The findings are made available in the World Bank’s latest Global Economic Prospects 2011.
The World Bank expects the Albanian economy to reach a 4.2 growth rate only in 2012 when government expects the GDP at 6.1 percent.
The World Bank and the Albanian government discrepancies in the GDP indicator are also observed in 2009 when a 2.5 percent increase is reported compared to government and INSTAT’s 3.3 percent.
As far as the current account balance is concerned, the World Bank estimates this indicator will drop to -12.2 percent of the GDP in 2010, down from a record -15.6 percent in 2009. Meanwhile, the Albanian Finance Ministry says the current account balance dropped to -9.5 percent of the GDP in 2010, down from -14.8 percent in 2009. The World Bank expects this indicator to drop -10.9 percent of the GDP in 2011 and -9.9 percent in 2012 compared to government’s -8.8 percent in 2011.
The declining trend of this indicator has been a result of a boom in exports in 2010, when the country’s exports registered a significant 70 percent increase compared the crisis year of 2009 also helped by massive electricity sales abroad.
According to the recent data by the customs administration, Albania exports grew 62.8 percent in volume and 100.3 percent in value during 2010. The volume of exports rose to 2.38 billion tonnes, up from 1.46 billion tonnes in 2009 while their value to 75.3 billion lek or double the amount in 2009.
Albania’s 2011 GDP growth rate at 3.7 percent in the World Bank’s Europe and Central Asia countries covered in the report is better compared to neighbouring Macedonia and even EU members Bulgaria and Romania but lags behind Kosovo at 5.7 percent.
Back in 2009, Albania was one of the few economies to register positive growth rates in the World Bank’s 18-country list were Albania is placed.
Albania was described in the report as a transition country along with Bulgaria, Lithuania, Macedonia, Macedonia and Romania.
The report also points out the risk of potential spillover effects from the Greek financial sector which owns considerable assets in the region.
“Another potential transmission channel could be through the financial sector. Banks in the countries under close financial market scrutiny hold international claims in emerging markets of around $0.7 trillion. Albania, Bulgaria, Romania, and Serbia are economies that have benefited in the past from heavy capital inflows from Greek financial institutions,” says the report.
The world economy is moving from a post-crisis bounce-back phase of the recovery to slower but still solid growth this year and next, with developing countries contributing almost half of global growth, says the World Bank’s latest Global Economic Prospects 2011.
The World Bank estimates that global GDP, which expanded by 3.9% in 2010, will slow to 3.3% in 2011, before it reaches 3.6% in 2012. Developing countries are expected to grow 7% in 2010, 6% in 2011 and 6.1% in 2012. They will continue to outstrip growth in high-income countries, which is projected at 2.8% in 2010, 2.4% in 2011 and 2.7% in 2012.
In Europe and Central Asia, output is expected to expand by 4.7% in 2010, following a 6.6% decline in GDP during 2009, as several countries undergo intense restructuring.
Albania can sustain growth in the future by implementing a new generation of policies and reforms focused mainly on education and skills, ICT development, energy sector, and better governance and rule of law, says a recent report of the World Bank which was presented in Tirana. The report titled “The New Growth Agenda”, known also as the Country Economic Memorandum for Albania is a result of an extensive research and analysis of the Bank carried out together with international experts, as well Albanian experts.
IMF
The International Monetary Fund (IMF) expects the Albanian economy to grow by 3 percent this year and 3.5 percent in 2011 under the new estimates raised few months ago, yet, almost twice less compared to government’s GDP projections. According to IMF’s new World Economic Outlook report, Albania will return to 5 percent GDP growth rate only by 2015. Meanwhile, government expects a 4.1 percent growth in 2010, 5.5 percent in 2011, 6.1 percent in 2012 and 6.2 percent more in 2013.
IMF representative Gerwin Bell has suggested that government should further lower the 2011 budget deficit to 2.5 percent of the GDP and provide prudent projections on economic growth and revenues.
Warning of the major risk the country’s high public debt levels pose, IMF’s Bell said that further lowering public debt is a key priority to reduce risks of macroeconomic instability.
While government says the 2010 public debt will be at 59.5 percent of the GDP, IMF’s prediction for 2010 is 62.8 percent, 2.8 percent more than in 2009. The 2011 government expectations are to lower it to 59 percent of the GDP, before dropping it to 56 percent in 2012 and 54 percent in 2013.
