In a press release, the Bank of Albania announces that the meeting assessed the risks that the Albanian economy may face amid the escalation of the Russia-Ukraine conflict, as well as the necessary measures to cope with the situation.

This conflict has started to have a spillover effect on the world economy, both in terms of rising prices of some essentials as well as in terms of increasing investor and financial market uncertainty.
For this reason, the Bank of Albania and the Ministry of Finance and Economy are working with intensity and responsibility to assess Albania’s economic, trade and financial exposure to the countries involved in the conflict, as well as the expected spillover effect of this conflict in the future.

Estimates so far suggest that the country’s economic and financial health remains stable and the expected impact of geopolitical tension is expected to be limited and manageable.

More specifically, the Bank of Albania estimates that – in its entirety – Albania’s direct trade and economic exposure to Russia and Ukraine is low. Also, the economic and financial stability of the country is consolidated.

The exchange rate appears stable and the foreign exchange reserves remain at an adequate level. In particular, the banking sector operates normally, with good indicators of capitalization, liquidity and performance, as well as low exposure to the region in conflict.

“Our preliminary resilience tests show that the Albanian economy has enough space to withstand the probable shocks that come from direct exposure to countries in conflict. These shocks may derive from the reduction or disruption of trade flows, from rising prices for certain products or from increased uncertainty in international financial markets. “If the conflict is contained, in its temporal and geographical dimensions, these shocks will leave only transitory traces in economic activity and inflation,” the BoA says.

The Bank of Albania and the Ministry of Finance and Economy shared the opinion that the attention of monetary and fiscal policy should be oriented towards maintaining the economic and financial balances of the country, using the instruments and sufficient space available to mitigate possible shocks. Both institutions expressed their readiness to take any necessary action to minimize the possible negative effects. Coordinated action will be crucial to mitigate risks and navigate safer in the coming challenging period.

Also, the Bank of Albania and the Ministry of Finance and Economy shared the opinion that the situation should be kept in check. Further escalation of the situation and potential expansion of the conflict to other countries would produce a new economic reality and would require more comprehensive measures to manage the situation. /j.p/sm/