October 5 (SeeNews) - Albania's economy is expected to expand by 3.2% in 2022, after growing by an estimated 8.5% in 2021, the World Bank said, keeping unchanged its forecast for the current year made in June.
In 2023, the World Bank sees Albania's economic growth decelerating to 2.3%, the global lender said in its Europe and Central Asia October 2022 Economic Update published on Tuesday.
"While the government plans to contain spending in line with fiscal consolidation plans, higher costs of public service provision create additional pressures on growth. Higher spending may be needed to guarantee energy supply through more costly energy imports and support to the fragile energy SOEs," the World Bank said.
Risks to the forecast for Albania's economic growth are dependent on the continuing geopolitical tensions, which could further increase inflation, disrupt supply chains, and disturb financial markets. This could also affect Albania's job market and lower purchasing power, thus slowing progress on poverty reduction.
The World Bank sees Albania's public debt declining to 68.9% of GDP in 2022 from 74% in 2021.
Average annual inflation is expected to reach 6.7% in 2022, before slowing to 4% in 2023. In 2021, the average annual inflation in Albania was 2.6%.
For the Western Balkans region, the World Bank is projecting an economic growth of 3.4% in 2022, down from 7.7% in 2021.
"Growth is projected to remain at an average of 2.9 percent over the forecast horizon, as EU accession reforms and investment mitigate the negative impacts imposed by higher energy and food prices, disruptions to trade and investment flows, and spillovers from the slowdown in euro area activity," the World Bank noted referring to the Western Balkans region.