In its end of the year reception, Governor of the Bank of Albania, Gent Sejko delivered a speech where he analyzed the performance of the country’s economy this year.
According to Sejko, “the overall performance of the Albanian economy in 2018 was positive”.
“Economic recovery is tangible across all of its dimensions. The pace of growth picked up, employment increased, internal and external balances were strengthened, while the main indicators of the banking sector’s soundness have been improving.
It is encouraging to see that the sources of economic growth are both increasing and well diversified. From the aggregate demand perspective, growth in the exports of goods and services and in the domestic consumption and investments continued to underpin economic growth. In the meantime, from a sectorial perspective, economic activity expanded, reflecting a more notable contribution from output in the industry sector and the services sector. Lastly, judging from the performance of macroeconomic factors, economic growth was also sustained by a stimulating financial environment, more favourable performance of our trading partners, improved balance sheets, and a more optimistic view of enterprises and households on the outlook.
All the above reasons fuel the optimism on the perspective of economic growth in the next year and onward. Albania has reached, among others, an important milestone on its path to development and integration: the expected opening of accession negotiations with the European Union. These negotiations should surely be viewed as an important development anchor and an additional guarantee for both domestic and foreign investor”, Sejko said.
Meanwhile, as far as economic stability is concerned, according to the head of the Bank of Albania, “the year just ending confirmed the stability of the Albanian banking sector. It may be considered as a special year in view of important structural changes in the system, which are expected to be finalised in the next year. Banking activity continued to expand, and the banking sector continued to be well capitalised, liquid and profitable. The NPL ratio continued to improve, hitting a new record low for the last eight years, standing at 12.89%, in September. Meanwhile, deposit growth was channelled mostly into investments in securities and less into lending. Certainly, the appreciation of the exchange rate and the lost loans write off provided a statistical effect on the indicators of credit performance. Also, credit in the national currency continued to prevail over the foreign currency credit. Nonetheless, the overall level of credit to the economy is still far from its potential and the opportunities for expanding lending abound.
I understand that this phenomenon entails a number of problems arising from sluggish demand as well as from supply, which is conditioned by tight credit standards. Nonetheless, beyond structural factors, I reckon that we should react so as to prevent a stagnant credit situation in the economy. For an economy that needs to develop rapidly, in order to converge with European Union levels, the situation should be changed and the levels of crediting should be higher, though still showing continual prudence concerning credit health.
Moreover, it is in your financial interest to address this phenomenon with determination, in order to put it on track for a sustainable solution. The financial resources you have and the considerable space that exists for financing the economy show that financial efficiency in the banking activity could improve significantly.”/ibna/