Tuesday, July 13, 2010
Albania - V Shaped Recovery ahead
IMF Article IV Staff Report on Albania is released;
Outlook: The baseline is for a V-shaped recovery, albeit to a lower potential growth than before the crisis, with low inflation and external imbalances narrowing. However, downside risks are significant
and elevated budget financing requirements under unchanged policies will crowd out private investment,thereby undermining potential growth over the medium term.
Policy Discussions: A tighter fiscal stance with improvements in productivity and competitiveness is a superior adjustment strategy, and consolidation could serve to enhance, rather than damage, growth
prospects. The authorities’ fiscal adjustment strategy is based on over-optimistic revenue and growth expectations. There was agreement of the benefits of a clear, credible, and monitorable fiscal rule to safeguard fiscal sustainability. Monetary policy should remain cautious and supervisors remain vigilant, given heightened regional uncertainty. Improvements in the business environment are critical to harvest the benefits from closer EU integration.
Links on Albanian data:
Ministry of Finance
Bank of Albania
Ministry of Economy, Trade and Energy
Institute of Statistics