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Moody's report: Big income gap between Albania and the EU, emigration is a risk for the shrinking of the population

Politiko 2023-04-11 09:26:38

Moody's report: Big income gap between Albania and the EU, emigration is a

Moody's expects Albania's economy to continue to show resilience in 2023 and 2024, as the EU membership process progresses and the country balances its public debt ratio, weakening measures of debt affordability.

In a statement, Moody's said that the stable outlook reflects the view that risks to Albania's credit profile are balanced at the B1 level. Moody's expects Albania's economy to continue showing resilience in 2023-2024. The EU accession process as the main external anchor for reforms will result in a further gradual implementation of structural economic and institutional reforms.

The improvement in the country's public debt ratio will be balanced by weakening measures of debt affordability.

The first driver of today's affirmation relates to the strong economic growth outlook of the Albanian economy with Moody's assessment of potential growth of around 3%, which combines with structural weaknesses and exposure to physical climate risks to result in a strong moderate economic.

It is worth noting that the Albanian economy has shown considerable resilience to triple shocks since the end of 2019, namely the earthquake at the end of 2019, the coronavirus pandemic that pushed the Albanian economy into recession in 2020, and the European energy crisis that began in 2022 caused by the war in Ukraine.

However, Albania's income gap with the EU remains larger compared to most Western Balkan countries and reaching EU levels is only gradual. GDP per capita was only 34% of the weighted average of the EU's population in 2022.

Also, the demographic trends, which are part of Moody's assessment of the very negative social risk for Albania, are unfavorable and will slow down potential growth in the medium and long term, if not mitigated by economic reforms or increased productivity growth.

Continued outward migration intensifies adverse demographic trends, and in the three decades to 2050, the working-age population is likely to decline by 0.5% and 0.6% per year, respectively.

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