EC: Albanian Economy Will Grow by 3.5% in 2017
Albanian Daily News
Published February 14, 2017

The European Commission said on
Monday it affirmed its previous forecast for Albania's 2017 economic growth at

Growth is expected to be driven mainly
by household spending and private investment, the Commission said in its Winter
2017 Economic Forecast.

The Commission evaluated positively
Albania's accommodative monetary policy stance, the improving labor market and
the strong FDI inflows.

"The fiscal deficit and the public debt
ratio are projected to decline, but the government's commitment to fiscal
consolidation may be tested by the end of the IMF program and the upcoming
elections," the EU's executive body said.

The European Commission slightly raised
its projections for Albania's 2018 GDP growth, to 3.6% from 3.5% in its
November forecast.

"Increased political uncertainty
related to the parliamentary election in June 2017 might dampen consumption and
investment," the Commission warned. Credit recovery might take longer than
expected in the context of persistently high NPLs, it added.

For 2016, the Commission said it expects
the country's gross domestic product (GDP) to have grown by 3.3%. Previously,
it had projected an economic growth rate of 3.2%.

The Commission also said that the
Albanian central bank's decision to keep its policy interest rate unchanged at
the record low level of 1.25% since May last year will continue to support the
increase in domestic demand.

Household spending is benefitting from
favorable financial conditions, as well as from improvement in the labor market
conditions. In the third quarter unemployment was 15.2%, record-low in more
than three years. Meanwhile wages are rising.

Consumer price inflation was 2.2% in
December and is expected to reach the 3% target of the central bank in the
course of 2018.

The upward trend in investments, mainly
related to ongoing energy projects, such as the Trans Adriatic Pipeline, is
also projected to continue in the next two years.

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