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A month after the European Bank for Reconstruction and Development (EBRD) worsened its outlook for Albania’s economic growth in 2013, the World Bank published its latest Global Economic Prospects report in which it improved its expectations for the small Balkan country. The World Bank now expects Albania’s GDP to grow by 1.8% this year speeding up from a 1.6% expansion in 2012. The World Bank is slightly more optimistic than the EBRD that cut its estimate to 1.5% from 1.6%. The two forecasts are broadly in line with the IMF’s estimate for a 1.8% GDP growth but well below the government’s target despite the fact that the cabinet lowered its expectations to 3.1% from 4%.
Albania’s general budget deficit widened by 97% on the year in the first four months of 2013 to equal 1.6% of the projected full-year GDP. The current account deficit, on the other hand narrowed in the first quarter of 2013 thanks to shrinking foreign trade gap that partly offset deteriorating services and current transfers accounts.
The country’s gross foreign debt increased by 1% on the quarter to account for 53% of the GDP as of end-March. The country’s rising indebtedness is putting pressure on economic growth prospects and limiting the room for fiscal manoeuvres, the international financial institutions have repeatedly warned.
Consumer price inflation in the country eased in May and yet the annual growth was above last year’s levels. Producer prices grew at a slightly faster rate in the first quarter than in the previous three months, data from the statistics office showed.
Albanians will cast their votes on June 23 to elect a new 140-seat parliament in a race fiercely contested by the two leading political parties; the ruling centre-right Democratic Party (DP), led by PM Sali Berisha, and the left-wing Socialist Party (SP), led by Edi Rama.
Albania’s parliamentary elections are luring international interest. The upcoming polls are seen as a crucial test for the country’s democratic and institutional development, the success or failure of which will affect the EU integration process and related Albanian aspirations.
The most recent polls predict that the SP might win between 42% and 49% of the vote on his own. The DP will likely grab 42%-47% of the vote. Meaning that support from smaller parties will be required to form a stable government.
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