Next Year Likely to Bring Economic Gains for Albania

January 14, 2015

Tahseen Sayed, Country Manager for Albania Monitor Magazine

Published in the Monitor Magazine on January 12, 2015.

The next year is likely to bring economic gains for Albania. Growth has revived during the last months of 2014 due to improved credit growth, clearance of domestic government arrears and a rise in business confidence. Recent survey indicators point to a broader-based recovery of private domestic demand. Even private investment which has been a drag on growth in recent years, have started to grow.

We expect Albania to grow by approximately 3 percent in 2015 if this positive trend continues and growth is bolstered by large foreign investment projects related to the Transadriatic pipeline and the energy sector. The economic impact of the fiscal consolidation, which is key for strengthening Albania’s macro-fiscal outlook and putting Albania on a sound basis for long-term growth, is likely to be mitigated by continued reforms of the business climate. Tackling the long-standing clearance of arrears should also help further boost business confidence and support an increase in private sector investment which has been negative in recent years.

In order to increase the economic gains from the government’s fiscal policy stance, it will be important that fiscal consolidation is “smart” so inefficient public spending is eliminated, public investments support the country’s priorities and fiscal policy is supported by far-reaching reforms in support of improvements of the business climate.

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