Page 32 - SE Outlook Regions 2023

In the first ten months of 2022, Albania’s exports reached ALL404bn, up
by 35.0%, while imports stood at ALL778bn, up by 23.1%. In summer
2022, adverse weather conditions kept hydropower generation low,
which forced Albania to hike its imports of electricity at a time of
extremely high prices.

Looking ahead to 2023, the European Commission forecasts that
slowing domestic demand will decrease import growth strongly. This will
result “in a slightly positive contribution of net exports, also helped by
moderate service export growth, as tourism to Albania remains
relatively cheap and attractive.” Electricity imports remain uncertain as
they are dependent on weather conditions.

Commenting on Albania’s external positions for 2022-2024, the
European Commission said: “In 2022, rising commodity import prices
are projected to widen the merchandise trade deficit even further and to
increase the current account deficit by about 0.8 pp to 8.3% of GDP in
2022, despite a growing service surplus and currency appreciation.
Decelerating import growth, improving terms of trade and a steady
growth of services exports and remittances are set to help the gradual
decrease of the current account deficit to 7.4% of GDP in 2024.”

2.1.3 Inflation and monetary policy

Albania’s annual consumer price inflation rose again to 8.3% in
October, up from 8.1% the previous month, statistics office Instat said
on November 8. Month on month, the consumer price index (CPI) rose
by 0.4%.

Albania’s inflation rate has been climbing sharply since the start of the
global recovery from the coronacrisis, and even more so after the
supply shock from Russia’s invasion of Ukraine, though it is still lower
than most countries in the region.

Rising food prices were the main contributor to Albania’s annual
inflation, increasing by 14.6% y/y and contributing 5.1 pp to the overall
increase.

Within food, the sharpest increase was for oils and fats, where prices
shot up by 27.4% y/y, followed by milk, cheese and eggs (24.3%),
bread and cereals (17.1%), fish (15.3%), confectionary (14.7%), meat
(12.4%) and vegetables (11.8%, including potatoes).

The fastest growth was in transport prices, which rose by 16.9%,
adding 1.0pp.

32 SE Outlook 2023 www.intellinews.com