The International Monetary Fund (IMF) has recently released its latest global report, and it contains some revisions to its economic growth predictions for Albania.
According to the newly published October report, the IMF has increased its growth forecast by a noteworthy 1.4 percentage points, projecting an economic expansion of 3.6% in the year 2023.
In contrast, the IMF’s earlier forecast in the April report had estimated a lower growth rate of 2.2% for 2023, with expectations of acceleration to 3.3% in 2024 and continued growth at similar levels until 2028.
For the year 2024, the IMF maintains its earlier estimate from the April report, with growth expected to be 3.3%, followed by a slight improvement to 3.5% by 2028. These adjustments align with the IMF’s updated assessments, which revealed that the growth rate for 2022 was actually 4.8%, higher than the initial estimate of 3.7%.
Additional data from the Institute of Statistics (INSTAT) indicates that the country’s domestic economy experienced growth of 2.83% and 3.23% in the first and second quarters of the current year, respectively. This growth was primarily driven by the construction sector and non-performing assets. The expectation is that growth will gain momentum in the coming months, spurred by a robust performance in the tourism industry.
In terms of regional growth for 2023, Montenegro is expected to lead with a growth rate of 4.5%, followed by Kosovo at 3.8%, and Albania and North Macedonia at 2.5%. Serbia and Bosnia and Herzegovina are projected to have growth rates of 2%.
The IMF anticipates that the average inflation rate for the country will be 3.8% for the current year. This represents a slight revision from the April report, which had predicted an average inflation rate of 3.9%. However, the October assessment diverges from the April report in that it now expects inflation to remain above the 3% target set by the Bank of Albania for 2024, with an average inflation rate of 3.6% predicted for that year.
Regarding the global economy, the IMF’s report paints a picture of a slow recovery from the impacts of the pandemic, Russia’s invasion of Ukraine, and the rising cost of living.
While the global economy has not come to a standstill, growth remains sluggish and uneven, with growing disparities among regions. According to the IMF, the global economy is sputtering rather than accelerating.
The IMF’s latest projections indicate a global growth slowdown from 3.5% in 2022 to 3% for the current year, further declining to 2.9% in the following year. This represents a 0.1 percentage point reduction in the growth forecast for 2024 compared to the July estimates, remaining well below historical averages.
Inflation is also on a decelerating trend, dropping from 9.2% in 2022 to 5.9% this year and further down to 4.8% in 2024. Core inflation, excluding food and energy prices, is expected to follow a similar path, gradually declining to 4.5% by 2024.
In conclusion, the IMF’s projections now align more closely with a scenario of a “soft landing”, where inflation decreases without a significant economic slowdown, particularly in the United States, where unemployment is expected to rise only modestly from 3.6% to 3.9% by 2025.
Despite reduced risks compared to April, elevated concerns persist, including the crisis of non-performing assets in China, volatility in commodity prices (especially oil and food), persistently high inflation levels, fiscal buffer depletion, and the gradual shift in monetary policy towards easing, which could increase risks, especially in emerging markets.
