The World Bank has revised its growth projections for Albania in 2023, now anticipating a 3.6% increase compared to the earlier forecast of 2.8% made in June this year. This positive outlook was announced by the Ministry of Finance and Economy.
The report from the World Bank highlights the resilience of Albania’s economy despite facing successive challenges between 2019 and 2022, including earthquakes, the pandemic, and Russia’s occupation of Ukraine. Albania managed to rebound strongly, with growth rates reaching 8.9% in 2021 and 4.8% in 2022. The report also notes a continuous decline in poverty rates throughout 2022.
One crucial factor contributing to Albania’s resilience is its proximity to the European Union, which facilitates investments, remittances, and exports. The construction and tourism sectors are identified as key drivers of the country’s economic growth.
Regarding current developments, the World Bank report indicates positive signs with key economic indicators pointing towards an acceleration in growth during the second and third quarters. This includes a record number of foreign visitors in July 2022 and increased construction activity.
Other factors supporting the positive outlook are rising income from employment, credit expansion, favorable economic sentiment among businesses and consumers, as well as increased tax revenues. These factors collectively suggest continued growth in the second and third quarters, driven by higher consumption, increased investments, and exports.
Employment has also seen a boost, with a 4.4% increase in the first quarter of 2023. Wage growth and improved employment opportunities have led to higher participation in the labor force, reaching 64% in the first quarter of 2023, the highest level since 2019.
With strong GDP growth expected for 2023, the report predicts a 1.9% reduction in poverty rates, bringing the figure down to 22.2%.
The World Bank’s projection of 3.6% economic growth for Albania in 2023 is based on international financial conditions.
However, the report also anticipates that the growth in tourism and construction activity will further boost exports, consumption, and investments, potentially reaching levels seen before the pandemic.
In addition, public debt is expected to decline to 63.1% of GDP in 2023 and is projected to continue decreasing in the medium term. This reduction is attributed to robust nominal growth and a gradual reduction in the fiscal deficit, as outlined in the World Bank’s latest report.
