This report covers the main macroeconomic releases from August 5 to September 6 as well as the financial and political events that took place in Albania during this period.
Last month ratings agency Moody’s said it affirmed Albania’s B1 government bond rating with a stable outlook welcoming the fiscal consolidation efforts adopted by the new government under the three-year loan-agreement with the International Monetary Fund (IMF). Moody’s said the measures provide a significant initial response to the sharp deterioration in fiscal strength registered in 2013, especially with respect to revenue generation where Albania continues to perform below regional peers. Moody’s has acknowledged as another positive factor the winning of EU Candidate Country status, which according to the ratings agency, represents an anchor for institutional reforms and is a potential driver of foreign direct investments (FDI).
An IMF mission visited Albania in August to review the country’s progress under the stand-by agreement The head of the mission urged the authorities to continue with fiscal consolidation next year in order to bring down the public debt. The high level of public debt is considered one of the main risks to Albania's GDP growth outlook. The IMF sees Albania's economy growing by 2.0% this year. Meanwhile, public debt is expected to rise to 72.1% of GDP at end-2014 from 70.5% at the end of 2013.
The latest competitiveness ranking by the World Economic Forum showed Albania’s economy losing ground with the country ranked 97th out of 144 countries around the world. The country slipped two places from the previous edition of the ranking. The report showed that corruption, access to financing and inefficient government bureaucracy continue to be the most problematic areas for doing business in Albania.

Key points:
• Albania’s consumer prices increased by 1.8% y/y in July, speeding up from 1.5% y/y June, mainly due to a faster growth in food prices.
• The general budget deficit narrowed by 38% y/y to ALL 30.8bn in the first seven months of 2014 and equalled to 2.2% of the full-year GDP forecast.
• Albania's general government debt, including state guarantees, increased by 2.3% on the quarter to ALL 917bn at end-June 2014. The debt accounted for 65.8% of the projected full-year GDP.
• The country’s foreign trade gap widened by 8.6% y/y to ALL 152.1bn in January-July 2014. The shortfall accounted for 10.9% of the projected full-year GDP, up from 10.4% a year earlier.