TIRANA, Aug 31 /ATA/ – The international credit rating agency Moody’s has reconfirmed Albania’s B1 rating with stable outlook in the latest review on the Albanian economy published on August 30, 2022.
The Agency said that Albania’s recorded a strong post-pandemic recovery with the Gross Domestic Production (GDP) reaching the pre-pandemic growth rate since 2021. The coronavirus pandemic severely affected economic performance in 2020. However, macroeconomic stability was maintained. The economic contraction during 2020 was milder (with a revision of 3.5%) and the recovery in 2021 stronger than initially expected (with real growth of 8.5%).
Presenting the findings of the Moody’s report, the Minister of Finance and Economy Delina Ibrahimaj noted that the agency has increased its growth projections for the Albanian economy and expects a real growth of 3.8% in 2022 up from an earlier growth forecast of 3.4% in early April.
While GDP performance continued to show strong momentum in the first quarter of 2022 with a growth of 6.0% year-on-year, the agency expects economic growth to slow down in the remaining months of 2022 and 2023. Rising energy prices and input costs create persistently high inflationary pressures resulting in weaker domestic demand. The lower growth in the countries, which are the main destinations of Albanian exports, is expected to hinder economic growth.
The Agency notes that economic and fiscal forecasts continue to be surrounded by high uncertainty due to the ongoing Russia-Ukraine military conflict and the risk of further escalation and/or expansion of the conflict.
The Agency estimates that Albania’s dependence on energy imports (oil, gas, etc.) from Russia is low. Moreover, Albania’s exposure to trade disruptions is very low as merchandise exports to Russia and Ukraine account for only about 0.01% and 0.14% of the country’s total exports.
Also, the direct exposure of the tourism sector is relatively low to Russia and Ukraine, and tourism kept further recovering in 2022, with tourist numbers exceeding pre-pandemic levels during the January-July period.
The agency expects consumer price inflation to remain high in the remainder of 2022 and then moderate to 3.5% in late 2023. For 2022 and 2023, average consumer price inflation is forecast at 6.7%, respectively and 4.0%, after 2.1% in 2021.
Albania’s main contingent fiscal risks are related to electricity imports, contingent liabilities arising from the energy sector, from the resolution of property restitution claims, stemming from the communist period, and from increased off-budget financing in the form of public private partnerships (PPP) that have been used as an instrument for increasing public investments.
The agency also highlights political risk, reflecting the polarized political landscape within the country, as well as the geopolitical risk, reflecting Albania’s increased exposure to geopolitical risks due to the military conflict between Russia and Ukraine.
/r.e/u.sh/
