TIRANA, Nov 9 /ATA/ The Bank of Albania estimates that, as in other economies, the return of inflation to the target rate is expected to be a gradual process, under conditions when internal pressures on prices, especially from the labor market, are stable.
Inflation in Albania decreased to an average rate of 4.1% in the third quarter, from the respective levels of 6.5% and 4.6% in the first and second quarters of the year. The downward trend in inflation has been driven by oil price drop and lower food inflation, reflecting the decline in these prices in global markets and exchange rate appreciation. But, on the other hand, core inflation and, in particular, service inflation continue to remain at high levels, giving a stable contribution to inflation and restraining its further reduction.
New economic information shows that demand in the economy is growing faster than the economy’s ability to service it. Thus, economic growth accelerated to 3.2% in the second quarter and indirect data suggest faster growth in the remaining half of the year.
Economic growth has been driven by increased consumption, investment and export of services, as well as supported by the well-financed health of the private sector, its high levels of confidence and the rapid growth of tourism.
The forecasts of the Bank of Albania indicate that inflation will decrease during the following quarters, returning to the target rate of 3%, starting from the second half of 2024. This forecast factors in the reduction of inflationary pressures from abroad, as well as the normalization of the stance of the monetary policy. This normalization, which means a gradual reduction of the monetary stimulus in the economy and the return of the monetary policy to a more neutral position, aims to create a suitable financial environment for maintaining the country’s monetary and financial stability.
/r.e/sm/
