TIRANA (Albania), January 24 (SeeNews) – Albania's gross domestic product (GDP) is expected to grow by 3.9% in 2018, compared with 3.8% growth last year, backed by continued foreign investments (FDI) in infrastructure, French credit insurance agency Coface said.
The Trans Adriatic Pipeline (TAP) and the Moglice hydro power plant, the second of three plants of Devoll hydro power project, are some of the major infrastructure projects that will support economic growth in 2018, Coface said in its Country and Sector Risks 2018 report.
“Local investment, particularly regarding the construction or modernisation of roads and railways (Tirana-Durres line) will remain limited by fiscal consolidation and the wariness of banks,” Coface said.
Coface also said that Albanian banks will continue to reduce the share of their non-performing loans as well as the share of the euro in their deposit and loan portfolios. The recovery of corporate credit should be modest, and the average interest rate on loans in leks and euro (respectively 6.6% and 4.7% in the second quarter of 2017) should remain high, despite the central bank's key rate of 1.25%, in force since May 2016.
“Household consumption is expected to continue to recover due to the increase in transfers of expatriates from Italy, the increase in labour market participation linked to a shrinking of the informal economy and related employment, even if unemployment remains high,” Coface added.
According to the report, structural reforms will continue with a view to winning EU membership.
The transposition into law of the 2016 constitutional reform aimed at increasing the independence and efficiency of courts is crucial for the EU accession process as well as for encouraging foreign investments, Coface noted.
Albania received EU candidate status in June 2014.
The President of the European Commission Jean-Claude Juncker said in December the EU executive body could recommend the opening of accession negotiations with Albania if the country makes further progress in the following six months.