Increasing confidence in the economy and favorable financial conditions have supported the growth of private consumption and investment during 2016. And, according to forecasts of the Ministry of Finance presented in Macroeconomic and Fiscal Framework 2017 - 2019, which was published recently in the Official Gazette, the economic growth for 2016 is projected at 3.4%.
Also, Finmin said in this document that the country’s economic growth is expected to rise gradually in the medium term period 2017 - 2019 at an average value of 4.1%. The government will allocate private capital to finance a broad package of public works projects, mainly in infrastructure and tourism.
This package makes it possible the investment of Lek 700 million up to Lek 1 billion in the next 2-3 years. Its goal is to restore rapid economic growth in Albania, same as in pre-crisis levels.
Based on projections of key macroeconomic indicators, fiscal measures taken, the expected effects of administrative improvement and other factors determining the performance of different items of income of the state budget, the total income for three following years (2017-2019) is projected to grow by an average of about 7.2 percent annually.
In its latest report, the International Monetary Fund ranked the Albanian economy 75th among 190 economies of the world in terms of the economic growth. Fund predicts that GDP in Albania will expand by 3.7 percent this year, leaving behind other countries in the region.
Currently experts say that the Albanian economy continues to operate below its potential, which in turn is reflected in inflation below the targeted objectives. During the first half of 2016 average annual inflation rate according to official statistics of Ministry of Finance was 0.7%.
Albania’s economic growth showed signs of recovery after the global economic crisis. As a result of the global crisis, growth rates were significantly reduced. Real growth in
2009 was halved from its historic trend, but continued to be positive as a result of limited exposure to international financial markets and an expansionary fiscal policy, initiated before the crisis.
Economic activity in Albania is directly impacted by the international economic environment, particularly in its trading partners, such as Italy and Greece, mainly through exports to them, remittances, and foreign direct investment (FDI).
Exports, remittances, and to some extent foreign direct investment (FDI) fell by turning on the main channels of transmission of external shocks on the economy.
The economic growth recorded its rate of 1.1 percent in 2013, due to the decline in consumption, investment freezing and financial and fiscal weaknesses that emerged.
Thanks to an increase in domestic demand supported by sound fiscal policies and structural reforms, growth is estimated to have reached 2.0 percent in 2014 and 2.6 percent in 2015, due also to an increase in consumption and private investment.