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Albania Country Report - June, 2014

  • July 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 24 pages

This report covers the main macroeconomic releases from June 5 to July 7 as well as the financial and political events that took place in Albania during this period.

Last month Albania scored a big victory after the EU Council granted it EU candidate status clearing the first hurdle on its route to full membership. Albania has failed to win the desired status three times since 2009. However, before formal membership talks begin the government in Tirana should do more to tackle corruption and organised crime, the Council said.

A few weeks before the June 29 meeting of EU heads at which Albania officially became EU candidate country, the Czech Republic warned that it will vote against such a decision unless Tirana settles its dispute with Czech power group CEZ, something which Albania eventually did days before the meeting.

A few months after the International Monetary Fund (IMF) agreed to provide Albania with a EUR 331mn credit to support the authorities' reform programme, the fund completed the first review of the country's economic performance under the loan deal and approved the disbursement of the second tranche of SDR 23.55mn (EUR 26.7mn) tranche. The first tranche of SDR 23.55mn was disbursed after the IMF board approved the loan on February 28.

In the meantime, Oxford Economics said in a new forecast that it keeps unchanged the country's economic growth estimate at 1.9% for this year. The global researcher warned that domestic demand will be constrained by poor credit conditions and weak balance sheets in the financial sector, while narrowing current account deficit, a gradually improving European economy and some progress on structural reforms will provide positive momentum for Albania.

According to London-based Business Monitor International, weak household consumption will also weigh on Albania's economic recovery.

Key points:

oAlbania's consumer prices increased by 1.6% y/y in May 2014, slowing down for a second month in a row from the 1.7% y/y growth in April and the nine-month high of 2.2% y/y in March. Producer prices edged down by 0.5% y/y in the first quarter of the year, reversing a 0.1% hike in the previous three months.

oThe current account deficit widened 30.4% y/y to EUR 300mn in the first quarter of 2014, equalling to 3% of the full-year GDP projection. The foreign trade deficit widened by 6.7% y/y to Q1 accounting for 7.3% of the full-year GDP, up from 7.1% a year ago.

oThe unemployment rate (age 15 and more) rose by 3.3pps y/y to 17.7% in the first quarter of 2014 on shrinking employment numbers.

Table Of Contents

Albania Country Report - June, 2014


IMF approves EUR 26.7mn tranche to Albania5

Oxford Economics sees Albania's 2014 economic growth at 1.9%.5

BMI says weak household consumption weighs on economic recovery in Albania5

UNCTAD estimates Albania's FDI at USD 1.2bn in 20136

C-bank cuts offer of two-year bonds on weak demand7

Central bank keeps key rate unchanged at 2.50%9

DandB says credit environment in Albania remains difficult9



Albania's 2013 GDP per capita at 30% of EU average - Eurostat11


CPI inflation decelerates further to 1.6% y/y in May 2014.11

Producer price index drops 0.5% y/y in Q1 201412

3.Labour market12

Unemployment rate up 3.3pps y/y to 17.7% in Q1 2014 - labour force survey.12

4.Industry and trade13

Retail sales growth speeds up to 5.7% y/y in Q1 201413

Industrial sales rise 3.8% y/y in Q1 2014.14



Growth in bank assets speeds up to 4.2% y/y at end-May 2014.16

Bank lending falls 1.7% y/y in May 201416

Moody's says banking systems of Balkan states on threshold of recovery, sees region's 2014 GDP up 2%18

Insurers' gross premiums up 30% in Jan-May 201418


Balance of payments19

Q1 current account deficit widens 30.4% y/y to EUR 300mn19

Foreign trade deficit widens 6.7% y/y in Jan-May 201420


Albania signs EUR 18mn loan agreement with EIB to finance key road project.23


Albania wins EU candidate status.23

Albania fares better in democratic governance index Nations in Transit 2014 - Freedom House24

Table 1 FDI inflows6

Table 2 FP7 results10

Table 3 CPI inflation12

Table 4 PPI inflation12

Table 5 Retail sales13

Table 6 Budget balance14

Table 7 Insurance premiums19

Table 8 Current account20

Table 9 Foreign trade21

Figure 1 Yields on 2-year bonds7

Figure 2 Bank assets16

Figure 3 Bank loans16

Figure 4 Foreign trade21

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