Albania economics highlights (week 27/2022)
Updated: Aug 21, 2022
Central Bank of Albania Monetary Policy decisions on July 6th
Based on its revised and updated projections, Bank of Albania suggest inflation in Albania will continue to remain elevated during 2022.
Against this backdrop, the Supervisory Council deems that an accelerating inflation rate, is the main risk jeopardizing a sustained and long-term economic growth of Albania.
The Supervisory Council of the Bank of Albania decided to increase base and other interest rates as follows:
base interest rate to 1.25% from 1.0%
interest rate for the overnight deposit facility to 0.25% from 0.1%
interest rate for the overnight lending facility to 2.25% from 1.9%.
Key areas mentioned during the press conference on monetary policy :
Higher demand for goods and services was reflected into a further expansion of employment and wages in the first quarter, providing an additional factor to the accelerating inflation rate. According to the official data, unemployment fell to 11.3% in 2022 Q1, while wages in the private sector increased by 10.5%.
The financial market in Albania continues to be characterized by contained risk premia, ample liquidity, a stable exchange rate and expanding credit. Annual credit growth to the private sector has accelerated further to 13.8% in May.
BoA baseline scenario projections indicate that the inflation rate will peak in the third quarter of the year, close to the current level, and will start decreasing progressively thereafter. Inflation is expected to return to target in the first half of 2024. Source:Bank of Albania
Annual inflation rate June 2022
The annual inflation rate in Albania rose to 7.4% in June from 6.7% in May and 6.2% in April. The monthly change of consumer price index is -0.1 %.
The annual growth rate in June was mostly influenced from the change in prices of the “Food and non-alcoholic beverage” group (+4.38 p.p.), followed by the “Transport” group (+1.53 p.p.). Source: INSTAT
GDP annual growth in Q1 2022
Albania's gross domestic product expanded 5.97 percent year-on-year in the first quarter of 2022, following a 5.5 percent gain in Q4 2021. The sectors that contributed positively are: Construction by +1.95 percentage points; Trade, Transport, Accommodation and Food Services by +1.55 percentage points; Real estate activity by +0.91 percentage points; Professional services and Administrative services by +0.66 percentage points; Financial and insurance services by +0.26 percentage points; Industry, Electricity and Water by +0.24 percentage points; Information and Communication +0.03 percentage points; Agriculture, Forestry and Fishing by +0.01 percentage points.
The sectors with negative contribution are: arts, entertainment and recreation services, other services by -0.35 percentage points; public administration, education and Health by -0.18 percentage points. Net taxes contributed positively by +0.89 percentage points. Exports rose more than imports in Q1 2022 (25.25% vs 17.62%). Source: INSTAT
GDP annual growth rates in Q1 2022 in the Western Balkans:
Sources: Statistical Office of Montenegro; INSTAT; Kosovo Agency of Statistics; Statistical Office of the Republic of Serbia; State Statistical Office of the Republic of Macedonia