Compared to the six SEE countries covered in the report Albania’s 2012 growth at 0.8 percent would be worse only compared to Kosovo’s 3.6 percent but far better compared to other regional EU aspirants
TIRANA, Dec. 18 – Citing impacts from the Eurozone crisis and high commodity prices, the World Bank has downgraded Albania’s growth forecast for 2012 to 0.8 percent down from 1.6 percent last June, according to a South East Europe Regular Economic report released this week. For 2013, the World Bank expects the Albanian economy to grow by 1.6 percent, slightly higher compared to other international financial such as the IMF and the EBRD, but yet 2.5 times lower compared to what the Albanian government expects.
Compared to the six SEE countries covered in the report Albania’s 2012 growth at 0.8 percent would be worse only compared to Kosovo’s 3.6 percent but far better compared to other regional EU aspirants Serbia, Macedonia, Bosnia and Herzegovina, Montenegro whose growth levels range from -2 percent to 0.2 percent.
Speaking to reporters, Kseniya Lvovski, the World Bank country manager for Albania, appealed on western Balkan countries to accelerate structural and fiscal reforms. She described the privatization of the electricity distribution system by CEZ back in 2009 as hasted and urged for an amicable solution.
“The growth outlook for 2012 is at around 1 percent, mainly due to the continued deterioration of the external environment. Significant external shocks from Greece and/or Italy would depress growth prospects further given Albania’s large trade, labor market, and banking system links with Italy and Greece,” said Jane Armitage, Country Director and Regional Coordinator of Southeast Europe in a farewell conference held in Tirana last October.
Speaking of the challenges the crisis poses, Armitage said “Albania, like many of its neighbors will have to develop strategies to stimulate growth, build human capital, and provide a reliable safety net for its most vulnerable.”
The World Banks suggests increasing Albania’s competitiveness through improving energy supply, strengthening road network securing property rights and making broad improvements in governance, anti-corruption efforts and public sector management.
In its previous SEE report examining six regional economies, the World Bank expected the Albanian economy to grow by 1.6 percent for 2012 and 2.5 percent for 2013. The report warned that Albania and Serbia will, unless major corrective measures are taken, breach their debt ceilings of 60 percent of GDP (Albania) and 45 percent of GDP respectively, set in their national legislation. Interest expenditures average around 1 percent of GDP in the SEE6 countries with the exception of Albania were interest expenditures in 2011 were 3.1 percent of GDP. Albania’s public debt as percent of government revenues at 228 percent is also the highest in the region with Montenegro ranking second with 151.5 percent.
Non-performing loans (NPLs) remain significantly elevated, averaging 14 percent across SEE6, while in Albania they are currently at 22 percent.
Albania lost three places in the Doing Business 2013 report although making it easier to start a business and pay taxes, according to a new report released this week by the World Bank and IFC. The report ranked Albania 85th among 185 economies, three places worse than in 2012, sandwiched between Croatia and Serbia but far worse compared to neighboring Macedonia and Montenegro which rank 23rd and 51st respectively.
SEE economies to shrink
The combined economies of the six South East European countries will shrink by 0.6 percent in 2012, and face formidable risks going into 2013 with expected growth of 1.6 percent, says a new World Bank South East Europe Regular Economic Report No.3 published this week.
Low growth and increased borrowing by governments in the six countries, as well as remaining financial and social vulnerabilities, have left the region acutely susceptible to the ongoing economic shocks of this crisis. Without significant further improvements in public sector governance, overall investment climate, and labor markets, chances of a speedy economic recovery in the region are low. In the meantime, governments in the region are being encouraged to use this crisis as an opportunity to accelerate the implementation of reform policies which can increase fiscal consolidation efforts and improve the overall investment climate in the Western Balkans. These reforms, coupled with strategic engagement by the international community, can help ensure better growth prospects and improved standards of living
