The low level of exports' diversification could be considered an essential weakness of the Albanian economy. Albania exports mainly minerals and oil and because of this, it is highly sensitive to the price of these exports, governor of the Bank of Albania Gent Sejko declared in an interview for local media recently.
According to him, inflation declined to 0.2-0.3% in the beginning of the year, in February and March while he added that such decline was due to the impact on the price of the products that Albania exports.
Further on, Sejko said that the level of economic perception is another weakness of the Albanian economy as the perception is way more negative that the economic reality in Albania.
“This perception has an impact attributable directly to foreign and domestic investments. Informality is another negative factor for the Albanian economy. Initiatives to fight informality have provided positive effects in relation to income. Thus, income increased however informality in Albania remains high,” governor said.
Asked on the Bank of Albania and Government’s national plan of measures to reduce non-performing loans portfolio, Governor Sejko said that the plan was well-studied and it affected all the elements and factors that would have their impact in the improvement of the non-performing loans ratio.
“Non-performing loans are not created during a single year. They are created and have increased over the years. Of course there are many elements of the plan of measures that will be implemented in 2017. The Parliament recently adopted the law on bankruptcy. Other laws that address the issue of non-performing loans have been adopted as well. So, we expect another write off of non-performing loans from the banks' balance sheets, which will lead to the reduction of non-performing loans,” he said.
In terms of the Bank of Albania expectations for 2017 as an election year, Sejko said that BoA does not expect major fluctuations or deviations from its forecasts despite the fact that this is a year of elections.
“There are positive and negative elements, related to the election year. The increase of public investments is one of the elements that affect economic growth. On the other hand, there are negative elements, which might be a lower income. However, these elements may offset each other in their balance thus not have any impacts. It is important that the electoral process is carried out correctly and there are no political issues,” governor noted.
While assessing the performance of the Albanian economy during last year, Governor stressed that the positive growth trend continued in 2016.
He added that this economic growth was a result of increased consumption and domestic private investments while he underlined that the Bank of Albania has followed an accommodative monetary policy, which has also affected the funding sources of this economic growth.