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TIRANA (Albania), December 21 (SeeNews) - Intesa Sanpaolo said on Wednesday it has lifted its 2016 economic growth estimate for Albania to 3.0% from 2.8% forecast earlier.
"GDP is forecast to grow by 3% (with possible upside to 3.3%) in 2016, and to further increase by 3.5% (with possible upside to 3.7%) in 2017, which compare to a growth rate of 2.6% in 2015," Intesa Sanpaolo said in its December forecast note which considers the countries where ISP has subsidiaries.
Albania's growth will be driven by investments in large FDI-financed energy projects, such as the Trans Adriatic Pipeline (TAP), higher private consumption, and higher revenues in the tourism sector, according to Intesa Sanpaolo.
"The TAP construction project is fully in process in 2016-2017, with a total investment of about 1.5% of GDP per year in each of the two years," Intesa said.
The bank mentioned the positive trend of decreased unemployment. According to the latest data from the Albanian statistical office, INSTAT, quoted by the bank, the jobless rate in Albania dropped to 14.7% in the third quarter of the year from 15.5% in the second quarter.
Consumer prices, which are the main focus of the monetary policy, are returning to an upward trajectory, the lender said. Inflation is expected to progressively approach the central bank's target of 3% by 2018.
In November, consumer prices in Albania increased by 1.9% on the year. Intesa Sanpaolo projects an annual average inflation of 1.3% in 2016 and 2.0% in 2017.
The level of public debt is expected at 71.4% of the country's gross domestic product (GDP) in 2016, and 69.1% of the GDP in 2017, Intesa Sanpaolo said.
Bank lending in Albania has gathered pace, supported mainly by domestic currency lending, though non-performing loans, 21.4% of all credits as of end-October, continue to be a drag on credit growth, Intesa Sanpaolo noted.
The bank also said that the increased NPLs and the environment of near-zero interest rates are the main reason for the decrease of the Albanian banking sector's net profit.
Intesa Sanpaolo Bank Albania was the country's fourth largest lender by assets at the end of the third quarter. It had a net profit of 1.9 billion leks (14.6 million euro) in the January-September period.