This report covers the main macroeconomic releases from September 7 to October 6 as well as the financial and political events that took place in Albania during this period.
Last month both the European Bank for Reconstruction and Development (EBRD) and Raiffeisen International kept their forecasts for Albania’s economic growth for this year at 1.7% and 2%, respectively. Despite leaving the forecast unchanged from May, the EBRD said prospects for Albania improved since then because of expected spillover effects from the progress in clearing arrears. The clearing of public arrears to companies should help alleviate the problems with the high share of non-performing loans and weak credit growth, thus contributing to a modest upturn in growth in 2014 and 2015, the EBRD commented.
For next year the EBRD is more optimistic about Albania's economy improving its forecast to 2.5% y/y from 2% y/y projected in May.
An IMF mission visited Albania between August 26 and September 9 to hold discussions on the second review under the EUR 330.9mn stand-by arrangement. The completion of the review, however, was delayed due to the arrest of central bank governor Ardian Fullani. The parliament voted on Sept 18 to dismiss Fullani after an employee at the bank admitted he had been stealing millions of dollars from the bank's vaults over the course of four years.
London-based Business Monitor International said that the arrest of Fullani will cast doubts over the country's progress in fighting corruption and hence undermine the country's attractiveness for foreign investors.

Key points:
• Albania’s consumer prices increased by 2% y/y in August, speeding up from 1.8% y/y the month before, mainly due to a faster growth in food prices.
• Producer prices edged down 0.7% y/y in the second quarter on the year, following a 0.5% drop in the previous quarter.
• The general budget deficit narrowed by 43.7% y/y to ALL 30.9bn in the first eight months of 2014 and equalled to 2.2% of the full-year GDP forecast.
• The country’s foreign trade gap widened by 8.7% y/y to ALL 178.7bn in January-August 2014. The shortfall accounted for 12.8% of the projected full-year GDP, lightly up from 12.7% of GDP a year earlier.
• Albania’s gross external debt expanded by 2.1% q/q to EUR 6.372bn as of end-June 2014, accounting for 63.9% of the full-year GDP projection, up from 60.9% a year earlier.