Bank of Albania cut economic growth forecast but optimistic about economy

The Bank of Albania is optimistic about the country's economic future, considering that the expansion of consumption and private investment is expected to be the main source of economic growth in 2016, Albanian Daily News reported on Thursday.

While presenting the monetary policy report for Q1 2016, the banking supervisory institution said that economic growth is expected to improve in 2017-2018.

On the other hand, the central bank publicly announced the reasons why it has lowered the expectations for this year's economic growth, which was lowered by 0.4 percent.

The banking regulatory institution noted that the international climate and the decline of business confidence were the reasons why the Albanian economy has yet to return to its potential.

"Economic growth for this year was expected to be higher than that of 2015. However, growth rates are lower than our previous estimates given expectations of a weaker performance in the euro zone, weakness shown in some sectors of the Albanian economy, and high business uncertainty," said the central bank.

"In the medium term, economic growth is expected to improve in 2017 and again in 2018. The Albanian economy is projected to gradually return to equilibrium during 2017, helping inflation to return to target around the end of 2018," added the bank.

The Bank of Albania also foresees a high flow of foreign direct investment. In the last report, the central bank emphasized again that the increased interest in long-term investments will be determined by structural reforms and an improving business climate. Endi