November 7 (SeeNews) - The European Commission (EC) said on Thursday it has lowered its forecast for Albania's economic expansion in 2019 to 3.1%, from 3.8% predicted in May.
“Economic growth is projected to decelerate to just above 3% in 2019, down from 4.1% one year earlier, due mainly to a weather-driven drop in electricity production,” the European Commission said in its Autumn 2019 Economic Forecast report.
Also, the slowdown reflects a strong base effect from weak gross fixed capital formation due to the conclusion of works related to the Trans-Adriatic Pipeline project.
Economic activity is expected to rebound in the next two years on the back of a continuing solid increase in household spending, the Commission noted, adding that Albania's economy is expected to grow by 3.7% in 2020 and by 3.6% in 2021.
“The combination of sustained gross domestic product (GDP) growth and moderate budget deficits is expected to continue reducing the public debt to-GDP ratio, which is however forecast to remain above 60% in 2021,” the EU's executive body noted.
Risks to forecasts are mainly on the downside due to the deteriorating external environment and the tense domestic political climate, the Commission said.
It also said that annual inflation rate averaged just 1.5% in the first nine months of 2019, well below the Bank of Albania’s target of 3%, as domestic inflationary pressures from wage increases and food prices were offset by muted import price dynamics.
The Commission also noted that the labour market has been registering some further gains in employment, leading to a drop in the unemployment rate to 12%, a historical low, in the first half of 2019.
“Employment growth is expected to continue at a steady pace, and the unemployment rate is forecast to decline further but still remain in double-digits in 2020 and 2021.”
Details on Albania from the European Commission's Autumn 2019 Economic Forecast follow (pct change unless stated differently):
|
2019 |
2020 |
2021 |
GDP growth |
3.1 |
3.7 |
3.6 |
Private consumption |
3.1 |
2.9 |
2.9 |
Public consumption |
2.6 |
1.8 |
2.2 |
Gross fixed capital formation |
2.8 |
3.4 |
3.5 |
Exports |
5.4 |
6.8 |
5.8 |
Imports |
4.8 |
4.4 |
4.0 |
Unemployment rate (% of total labour force) |
11.9 |
11.0 |
10.3 |
Harmonized consumer price inflation |
1.6 |
2.1 |
2.3 |
General govt gross debt (% of GDP) |
66.0 |
64.1 |
62.0 |