ECONOMIC DEVELOPMENT

ECONOMIC DEVELOPMENT

Twenty-two years after the “shock therapy” and the establishment of the “market economy” Albania is moving toward the final “closure” of an important transition cycle “from centralized economic planning to the free market”.  We have exploited and exhausted many possibilities in function of the market economy establishment and performance, in the framework of the structural regulatory package and preservation of the macro-economic balances. Main focus has been almost entirely on economic growth as the single success indicator of the performance of the economic and governmental policies.

We have built a typical transitional economic pattern that is the profile of the Albanian economy itself, which, with its both positive and negative traits, became the “locomotive” that pulled us through to the end of the second decade of this transition, which is, perhaps, one of the most radical in the entire group of countries of the Central and Southeast European. It appears, though, that the time and substance of this model has expired, given that many of its components and dynamics have reach peak and will not outlast for the next 15 to 20 years, until 2025-2030.

The global financial and economic crisis highlighted fundamental structural questions, such as:

• How sustainable is our economic growth?

• How sustainable are the sources and providers of this growth?

• Do we have the suitable model to guarantee the pace of this growth in the upcoming years?

• Do we have in place a structured and robust economy, which will takes us to a sustainable and long-term growth?

The Economy

• The new economic model

To ensure sustainable growth means that we will have to detect and identify “new feed-in sources for the economic growth” or the “substitutes” for some of the current sources of growth, which are expected to bring reduced outputs in short and mid-term periods.

Employment

It is indisputable and confirmed by current figures that there are one million unemployed people in Albania. Official records indicate that for 2013, Albania counts reduction of employment with 51,000 people as compared to 2008. Although we experienced a relatively constant economic growth during the period between 2001 and 2008, it was not accompanied by a rise in employment, or by the reduction of the informal economy or any development of the human capital.

Natural resources

• Energy production

Albanian Electric Energy System (AEES) has inherited a series of strategic, technical and technological, operational, commercial and financial challenges, which not only have risked the normal AEES development and functioning, including its integration with the regional energy systems and the new investments in the generation of the electric energy, but have made the sector a serious obstacle to achieving high and sustainable economic development of the country.

Urban, rural and regional development

• Territorial planning and development

One of the immediate goals of the Government is to end once and for all the era of informality that has prevailed in the development of the land, territory, and of the urban and rural areas. We are determined to establish an institutional, economic and social environment that favours the sustainable territorial development.

Infrastructure

• Transport

In the next four years, transport and infrastructure will be in function of the major goals of the country’s economic and social development and will be direct contributors to the economic growth and employment. The public-private partnership will be fundamental in this sector.

Macro-economic and fiscal profile

The Gross Domestic Product of the country has experienced a growth slowdown during the period between 2008 and 2012, from 7.5% to about 1.5%. ¾ of the nominal growth for the period results from the increased public debt. Prospects are expected to be similar for 2013, too. According to Albania’s economic growth is expected to be at a rate of 1.7% according Moody’s, while the both IMF and EBRD projections give a rate of 1.8%.