Albania’s Central Bank contends with slowing inflation

Investors eyeing Albania’s economic growth prospects in the week ahead are set to receive updates on the Balkan country’s consumer prices, as well as its central bank rate decision.

Albania’s government has been helping to fuel improved conditions in the nation through a host of new infrastructure projects. These structural reforms have been aimed mainly at increasing productivity and competitiveness in the country, as well as creating employment and improving governance.

The reforms seem to have helped the economy make some headway.

The pace of Albania’s gross domestic product (GDP) growth accelerated to 4.2% in 2018 from 3.8% in the prior year, underscored by job creation in industry and services, as well as a 1.5% drop in unemployment to 12.3%. Household spending and investment were also mainly responsible for the improved economic conditions.

However, while the country’s economic landscape appears rosier, the World Bank expects growth to slow to 3.8% in 2019, then level off at an average of around 3.6% over the medium-term.

Overall, Albania’s medium-term growth outlook largely depends on the pace of structural reforms, as well as progress towards acquiring EU membership.

According to the World Bank, the government has embarked on increasing public-private partnerships (PPPS) at a torrid pace, and while these may be helping to ease short-term funding constraints, they also appear to be increasing contingent liabilities and may limit the fiscal space for new investments.

Government in Albania decided to reducing the inflation as to improving the nations infrastructure. Meaning that the quality of standard of living actually rising. Thus leading the country’s employment rate increase and eventually improve to whole country’s economy. As Aggregate demand rises, the aggregate demand rises as well. Which would resulted in increase the GDP within the country.

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