EXECUTIVE SUMMARY
This report covers the main macroeconomic releases from October 7 to November 7 as well as the financial and political events that took place in Albania during this period.
Last month both the International Monetary Fund (IMF) and the European Commission published new forecasts saying Albania’s economy should see a gradual acceleration in growth between 2014 and 2016, following the slowdown over the last three years. Growth drivers include a pick-up in bank lending, government plans to clear public arrears clearance and planned large FDI projects. The IMF is a bit more optimistic expecting a GDP growth of 2.1% for 2014 and 3.3% for 2015. The EC sees Albania’s economy expanding by 1.8% in 2014 before gaining speed to 2.9% in 2015 and further to 3.5% in 2016. According to the latest data from the statistic office, the GDP edged up 0.4% on a quarterly basis in Q2 but swung into a 0.6% contraction on an annual basis from a 1.7% hike in Q1.
Winning EU candidate country status is boosting Albania’s long-term growth potential, US commercial information and analysis company Dun & Bradstreet (D&B) said in a new report. Ratings agency Moody’s also agrees that becoming EU candidate country is supporting Albania’s creditworthiness along with the government’s fiscal consolidation measures and the clearance of arrears towards the private sector under a three-year loan deal with the IMF. Moody’s rates Albania at B1.
In mid-October Standard & Poor’s affirmed Albania’s B/B long- and short-term sovereign credit ratings and revised the outlook to positive from stable on expectations that the government will reduce the budget deficit in the mid-term

Key points:
• Albania’s consumer prices increased by 1.5% y/y in September, easing from 2% the month before, mainly due to a weaker growth in food prices.
• The general budget deficit narrowed by 48.4% y/y to ALL30.5bn (EUR 219mn) in January to September and equalled to 2.2% of the projected full-year GDP, down from 4.4% in the same period a year earlier.
• The country’s foreign trade gap widened by 10.6% y/y to ALL204.7bn in January-September. The shortfall accounted for 14.7% of the projected full-year GDP, up from 13.7% a year earlier.
• Albania’s public debt expanded by 4.7% on the quarter to ALL 961.4bn at end-September and accounted for 63.9% of the full-year GDP projection, up from 60.9% a year earlier.