Kerin Hope: Positive growth forecast for Albania

Positive growth forecast for Albania

By Kerin Hope in Athens

Albania appears an unlikely bright spot on Europe’s gloomy economic map, with international institutions still forecasting positive growth of about 1.2 per cent this year.  While its cash-strapped Balkan neighbors seek emergency finance from the  International Monetary Fund, Europe’s second-poorest country, after Moldova, > secured a €250m ($340m, £224m) medium-term commercial loan last month, arranged by Deutsche Bank and Alpha Bank of Greece. The funding allows the right-of-centre government of Sali Berisha, prime
Minister, to complete an upgrade of the main highway to Kosovo – a key Infrastructure project. Ardian Fullani, the central bank governor, told the financial Times on Wednesday that the international loan had given a boost to Albania’s credibility with investors abroad and helped sustain liquidity in the domestic bond market. “We are weathering the crisis with less pain than others. Demand is still there and the budget [deficit] is under control,” he
said.
Credit expansion is set to slow this year from 36 per cent to about 15 per cent, “which is healthy in these times”, Mr. Fullani said. Austrian, Italian and Greek bank subsidiaries that control more than 70 per cent of assets “are well-capitalized, profitable and have performed strongly in a series of stress tests that we started last year,” he said.

 While Albania may benefit from being overlooked – it lacks a sovereign credit rating – it has not escaped the impact of the downturn. “It’s faring better than others, but this year’s projection still marks a dramatic decline after years of growth at 6 to 7 per cent,” said Jens
Bastian, an economist at Eliamep, an Athens-based think-tank. Exports of chrome and copper ore are slowing, along with remittances from migrant workers, which were flat last year at about €1bn. Yet investors are still showing interest. Tirana recently signed energy projects worth more than €3bn with Italian, Austrian and Norwegian companies to end a chronic
electricity shortage and make Albania a regional exporter.
“We think Albania can become an important regional trade hub,” said Philip George of Zumax, a Swiss-based company bidding for a €400m concession to modernize the port of Vlora.
Mr. Fullani said the government that emerged from June’s parliamentary election would seek a new arrangement with the IMF in order to maintain foreign investor confidence – “not funding but technical assistance for more structural reform”.