EBRD leaves the forecast for Albania's GDP unchanged: The economy will grow 2.5% this year
Albania's economy will grow by 2.5% this year according to the fall projections of the European Bank for Reconstruction and Development (EBRD), which left the forecast unchanged, the same as in the spring 2023 report.
Our country's economy grew by 2.7% in the first quarter of 2023, driven by weaker demand, although inflation was falling. Exports of goods decreased yesterday, due to the decrease in external demand and the strong appreciation of the lek.
The value of the Lek was 12% higher in July 2023 than a year earlier, reaching the highest level on record, supported by the higher number of tourists, as well as continued inflows of remittances and direct investments.
The EBRD analyzed that the appreciation of the currency offset part of the inflationary shock, which enabled an adequate monetary policy with a rate of 3% until the end of August 2023.
The EBRD predicts that economic growth is expected to continue at an average pace of 2.5% in 2023, given the weaknesses and prospects of Albania's main trading partner, Italy, and still high food inflation, which is eroding disposable income.
On the other hand, the exceptionally strong performance of the tourism sector, where the number of visitors grew by 30% year-on-year in the first seven months of 2023, is expected to support growth in both the short and medium term.
In line with the projected global recovery, economic growth is forecast to return closer to its potential, reaching 3.3% in 2024.
Western Balkan economies faced weak demand in trade with European partners, but this was partially offset by the strong performance of the tourism sector in service-based economies such as Albania, Montenegro and Kosovo.
GDP growth is expected to slow further this year, as the main partners in the Eurozone have slow growth rates (with a recession forecast in Germany).
On the other hand, inflation, while slowing down, continues to be a tax on household consumption.
Economies in the Balkans are increasingly turning to the external market for debt financing, with Serbia, North Macedonia and Albania issuing Eurobonds in the first half of 2023, and Kosovo, North Macedonia and Serbia engaged in debt financing programmes. continuous with the International Monetary Fund./Monitor