TIRANA (Albania), July 23 (SeeNews) – Albania’s economic growth is expected to accelerate to 4.2% in 2018 from 3.9% last year, the European Commission said in a new report.
The growth of Albania's gross domestic product (GDP) is anticipated to accelerate further to 4.3% in 2019 and 4.4% in 2020, the Commission said on Friday in the report assessing the 2018 Economic Reform Programmes (ERPs) of countries that are candidates or potential candidates for EU membership.
Private consumption in Albania is set to accelerate based on moderate growth in employment, gradually increasing wages and rising consumer confidence, the EC noted.
“Sustaining the ongoing economic recovery requires further reform efforts and the tackling of macroeconomic weaknesses in relation to public finances and the financial sector.”
The public debt-to-GDP ratio has been reduced but remains a major source of macroeconomic vulnerability.
“Public debt (including guarantees) is still close to the relatively high level of 70% of GDP and is associated with significant rollover, interest rate and exchange rate risks,” the EU executive body said.
According to Albania's ERP, the country's public debt-to-GDP ratio would fall from 71.5% in 2017 to 63.5% in 2020.
The Commission noted that Albania faces several obstacles to improving potential growth and competitiveness.
“A weak judiciary, insufficient enforcement of property rights and burdensome administrative procedures are institutional weaknesses that have been only partially addressed so far.”
The report also said Albania’s competitiveness continues to be hampered by inefficiencies in the energy sector, including insufficient security of supply.
Issues related to property rights and land registration continue to affect the competitiveness of the Albanian economy, the Commission said, adding that this is a cross-cutting issue affecting infrastructure and industrial development, agriculture, the property market and, importantly, access to finance.
The Commission also warned the employment and labour market participation remain low and the incidence of undeclared work significant despite some improvements.
“The policy guidance jointly adopted at the Economic and Financial Dialogue of 23 May 2017 has been partially implemented,” the Commission concluded.