TIRANA, August 10 – The improvement of the external balance of the Albanian economy is the main factor that has brought about the strengthening of the local currency in the exchange rate.
In the new monetary policy report, the Bank of Albania has unveiled an analysis of the factors that have brought about the strengthening of the lek and the effects of this strengthening on the economy.
According to the Bank, the strengthening of the nominal exchange rate during the last quarters is a result of the strengthening of the trend of the real exchange rate, or in other words of the structural improvement of the external sector of the economy and the overall increase in productivity of it, as well as the drop in risk premiums, or the increase in public confidence in the national currency.
Both of these factors seem to be dictated by the structural improvement of the external balance of the Albanian economy, an improvement which is illustrated by several indicators.
The current account deficit has had a clear downward trend during this period, from the level of 7.7% of GDP in 2021 to the level of 6% in 2022 and further to 3.1% in the first quarter of 2023. This improvement is dictated by the increase in foreign demand for Albanian tourism services.
According to the estimates of the Bank of Albania, in the absence of the strengthening of the exchange rate during the last two years, the inflation rate would be 2.5 percentage points higher. Also, according to the Bank of Albania, the strengthening of the exchange rate has helped to strengthen financial stability. /argjumentum.al
