An International Monetary Fund (IMF) mission, led by Anke Weber and including David Bartolini, Fazurin Jamaludin, Jakree Koosakul, and Hasan Toprak, conducted discussions with Albania for the 2024 Article IV Consultation from November 13 to 21. The mission issued a statement regarding Albania's economic performance and outlook.
The Albanian economy is projected to be one of Europe's fastest-growing in 2024. Following a growth of 3.9 percent in 2023, the IMF staff anticipates a real GDP growth of 3.6 percent this year. This growth is driven by domestic consumption, tourism, and construction activity. "Growth in 2025–2029 is expected to remain robust," according to the statement.
End-of-year inflation in 2024 is anticipated at around 2 percent, below the Bank of Albania’s target of 3 percent. However, inflation may temporarily rise in early 2025 due to base effects but is not expected to return to target until after 2026.
Risks include geopolitical tensions and global economic slowdowns that could impact domestic growth. There are also concerns about renewed commodity price spikes or weather-related shocks affecting electricity prices and inflation.
The authorities aim for a looser fiscal stance in 2025 despite outperforming the budget target for this year. A primary surplus of around 0.5 percent of GDP is expected for 2024, slightly above the budget target.
A stronger fiscal effort than currently projected would reduce financing needs and enhance resilience to fiscal risks. The IMF recommends modest primary surpluses from revenue administration reforms and increased spending efficiency.
Albania faces rising long-term spending pressures requiring ambitious reforms as public spending could increase significantly over the next two decades due to pensions, healthcare, and climate adaptation costs.
In terms of monetary policy, "the flexible exchange rate has served Albania well" according to IMF staff analysis which suggests it should remain a key shock absorber.
The financial sector appears resilient but requires continued supervisory vigilance due to vulnerabilities such as large-borrower exposures and rapid credit expansion in real estate.
Structural reforms are necessary for inclusive growth as part of EU accession efforts aimed at improving productivity levels which remain below EU standards despite recent increases.
Infrastructure improvements are critical for connectivity while maintaining governance reform momentum remains key for creating a sound business environment within Albania's economic landscape.
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