May 8 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Wednesday it has affirmed its November forecast for Albania's economic growth in 2019 at 3.9%, driven mainly by private consumption.
Growth is projected at 3.9% next year as well, EBRD said in its May 2019 Regional Economic Prospects report.
Downside risks remain, associated with the economic slow-down in Albania’s main economic partner, the eurozone, and internal risks including high public debt with contingent liabilities stemming from controversial public-private partnerships, and the ongoing political crisis, EBRD noted.
“Growth stepped up to 4.1% in 2018, on the back of a better industrial performance, primarily as a result of good hydrological conditions last year and, consequently, higher electricity production,” the bank said. Albania's GDP grew by 3.8% in 2017.
The lender also said unemployment in Albania continued to decline, but at 12% is still high, while inflation (at 2%) stayed below the central bank target of 3% for the seventh consecutive year, contributing to a further easing of monetary policy.
“The key policy rate is now at a record low of 1 per cent. Bank lending is expected to rise gradually, in line with the pass-through from lower interest rates and ongoing efforts to tackle non-performing loans in the banking sector,” the EBRD said.
In the report, the EBRD lowered its 2019 economic growth forecast for the region of Southeast Europe to 3.0% from 3.2% predicted in November, following a slowdown to 3.4% in 2018 from 4.3% in 2017. In 2020, growth is also seen at 3.0%.
"Each country in the region has its own challenges [...] The biggest challenge globally is the US-China trade war," the EBRD’s chief economist, Sergei Guriev, told SeeNews on the sidelines of the bank's annual meeting in Sarajevo, Bosnia.
"Our countries are not directly affected, but they are affected indirectly. If the Chinese economy goes down, the German economy goes down, and our countries are very much dependent on German and Western economies," Guriev said.