This report covers the main macroeconomic releases from July 7 to August 5 as well as the financial and political events that took place in Albania during this period.
A few months after the International Monetary Fund (IMF) agreed to provide Albania with a EUR 331mn credit to support the authorities’ reform programme, the fund said it expects the country’s economic growth to accelerate in the second half of the year supported by external drivers and a modest recovery in domestic demand. In the first review of the country’s economic performance under the credit arrangement, the IMF said it sees Albania’s real GDP growth at 2% in 2014 and rebounding to 4.2% in the mid-term driven by structural reforms that improve the business climate and raise potential growth, a gradual recovery in European partner economies and large energy-related investments.
According to the latest data from the statistics office, Albania’s economy expanded by 1.8% in the first quarter of 2014, easing from a 2.2% hike in the previous quarter. In quarterly comparison, the growth rate also slowed down to 0.2% in Q1 from 0.7% in Q4.
In the meantime, London-based Business Monitor International, part of Fitch Group, said in a new forecast it sees Albania’s GDP growing 1.8% y/y in 2014, speeding up from 0.7% y/y in 2013.
After in June Albania won the long-desired status of EU candidate country, the OSCE said the country needs to ensure constructive political environment in order to start talks for EU membership. The political parties should go beyond the great political divisions in order to establish the consensus for the sustainable solution of problems the country is facing.
Key points:
• Albania’s consumer prices increased by 1.5% y/y in June, slowing down for the third month in a row and easing from a 1.6% y/y growth in May.
• The general budget deficit narrowed by 54% y/y to ALL 22.2bn in the first half of 2014 and equalled to 1.6% of the full-year GDP forecast.
• The country’s foreign trade deficit widened by 6.7% y/y to ALL 101.6bn in January-May 2014. The gap accounted for 7.3% of the projected full-year GDP, up from 7.1% of GDP a year earlier.