TIRANA, April 12 – The World Bank has revised down Albania’s 2016 growth outlook to 3.2 percent, citing the need for additional reform and their pace and depth. In its new Spring report, the World Bank reduced Albania’s 2016 growth forecast by 0.2 percent on sluggish recovery in Europe and a cut in international oil prices affecting investments and exports.
“Sluggish recovery in Europe and around the globe, higher external volatility in financial markets, and shifts in oil prices bring risks to the outlook in the region,” says the report.
The World Bank expects Albania’s growth to be fuelled by the ongoing construction of the Trans Adriatic Pipeline and a major hydropower plant by Norway’s Statkraft in southeastern Albania.
“The pace of expansion is expected to gradually continue at 3.2 percent in 2016, and 3.5 percent in 2017. Investment in the Trans Adriatic Pipeline and a hydropower plant in southern Albania will help expand domestic demand,” says the report.
Due to the fiscal consolidation and efforts to reduce public debt, currently hovering at 72 percent of the GDP, government spending is expected to be limited affecting public investments.
“The medium-term outlook depends on the pace and depth of additional structural reforms in the energy and financial sectors and better management of public investment in infrastructure. Judicial reform is also crucial to make the investment climate more attractive and revive credit growth,” says the report.
The World Bank says maintaining the momentum on reforms and fiscal consolidation efforts will be critical.
“Priorities are to address high non-performing loans, reinforce tax administration and close loopholes, undertake additional reforms in the energy sector, improve public investment management, and mitigate the fiscal risks associated with local government arrears, public-private partnerships, and claims for compensation,” says the report.
Meanwhile, the International Monetary Fund kept Albania’s 2016 growth forecast unchanged at 3.4 percent in its latest World Economic Outlook report released this week.
