Albania Economic Outlook
Year-on-year economic growth moderated but remained robust in Q4, restrained by a softer increase in private consumption but fueled by a faster expansion in fixed investment. Data for H1 paints a mixed picture. Tourist arrivals increased by over 50% in January-April compared with the same months of 2022. Moreover, inflation fell in the same period. That said, the trade deficit widened 2.7% in annual terms in the first four months of 2023, as exports fell more than imports. On the fiscal front, the budget surplus expanded year-on-year in the same period, as revenue growth outstripped the increase in expenditure. Meanwhile, in May, Parliament approved a 17.6% increase in the minimum wage and an increase in public sector workers’ salaries, which should support spending while potentially weighing on competitiveness and job creation ahead.
Inflation fell to 4.6% in April from 5.3% in March. The result was mainly driven by softer increases in prices for food and non-alcoholic beverages, and hotels and restaurants as well as by a sharper fall in prices for transportation. Meanwhile, at its latest meeting on 3 May, the Central Bank held the key rate at 3.00%.