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Oct 10, 2022 15:52 EEST
October 10 (SeeNews) - The International Monetary Fund (IMF) said on Monday it raised its forecast for Albania's 2022 economic growth to 3.7% from 3% projected in May and advised the government to be prudent in managing rising risks and entrenching the positive economic growth momentum.
The economic growth in the country in 2022 is driven by robust activity in tourism, real estate and services, the IMF said in a press release following the conclusion of Article IV consultations with Albania.
The IMF sees Albania's gross domestic product (GDP) growth slowing down to around 2% in 2023 due to tighter financial conditions, the slowdown in Europe, and the necessary withdrawal of policy support.
The global lender expects Albania's inflation to peak in the coming months and return to the 3%-target by the middle of 2024.
Against this backdrop, further monetary tightening is needed to tame inflation, the IMF said, noting that it expects the Bank of Albania to increase its monetary policy rate to 3-3.5% in 2022 and 4-4.5% in 2023.
At the same time, fiscal support should be temporary and targeted to the vulnerable and authorities need to increase their efforts on structural reforms to lift Albania’s potential for sustainable and inclusive growth.
"Strengthening the efficiency and credibility of public finances remains crucial for preserving market confidence and mitigating higher borrowing costs," the IMF said.
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