The latest EBRD growth forecast Regional Economic Prospects and the results of a survey conducted with the IFO institute on the impact of the coronavirus crisis on selected countries reveals that Albania’s GDP is projected to contract by 9.0 per cent in 2020.
On Albania the growth forecast, which was disclosed by a press release issued on Thursday, finds the following: the Covid-19 pandemic is affecting the Albanian economy primarily through its negative effect on tourism, which normally contributes to more than a fifth of the country’s GDP. According to the Albanian Tourism Union, around 5 million overnight stays during the summer season have been cancelled this year. Also, goods exports to Italy, Albania’s main trading partner, fell by more than 40 per cent year-on-year during the most severe lockdown (March to May 2020), and by 15 per cent year-on-year in June-July. Overall, total exports of goods in the first seven month of 2020 were 17 per cent lower in year-on-year terms. The decline in remittances, which decreased by almost one fifth in the first half of 2020
versus the same period of 2019, has dampened private consumption. By end-August 2020, the government had adopted two economic support packages, worth 2.8 per cent of GDP. The packages
consisted mainly of increased government
expenditures to support businesses, sovereign guarantees and one-off social transfers. Monetary policy responded by policy rate cuts, to the record low of 0.5 per cent, while foreign exchange market
interventions at the end of March 2020 sought to mitigate depreciation pressures. By mid-2020 public debt stood at 80 per cent of GDP, 14 percentage points higher than at the end of 2019. Taking everything into account, Albania’s GDP is projected to contract by 9.0 per cent in 2020, rebounding by 4.5 per cent in 2021, supported by reconstruction after the earlier earthquake. These forecasts assume no major resurgence of the pandemic. /argumentum.al
