Page 25 - SE Outlook Regions 2024

Boosted by a strong rebound in tourism, the economy surpassed expectations with nearly 5% growth in 2022. The IMF attributed the success to a combination of factors, including fiscal consolidation, increased income and a strengthened local currency.
The latest figures published by Albanian statistics office Instat show that GDP grew by 3.23% year on year in volume terms in the second quarter of 2023.
Previously, Albania’s GDP expanded by 2.72% in the first quarter of 2023, after growth slowed during 2022.
The strongest annual growth in Q2 was in construction, which expanded by 14.61%, followed by other services at 12.37% and real estate activity, which surged by 11.72%.
Other sectors to show growth included information and communications, which grew by 8.14% and public administration, education and health, which increased by 5.26%.
Looking ahead to 2024, the budget is based on forecast economic growth of 3.8% next year.
This is somewhat more optimistic than the forecasts issued by international financial institutions (IFIs) in autumn 2023.
The IMF forecasts an expansion of real GDP of 3.3% in 2024, primarily driven by resilient private consumption, particularly in the tourism and construction sectors.
However, the Fund said, challenges persist, notably geopolitical tensions and the vulnerability to weather-related energy shocks, exchange rate fluctuations and persistent inflation.
The European Commission said in its Autumn Forecast 2023 report that it expects Albania’s economic growth to moderate to 3.1% in 2024.
Factors include slowing private consumption due to high food prices and tightened financing conditions impacting investment growth.
“Services exports, notably from tourism, are expected to remain robust, partially offsetting the decline in goods exports. A potential rebound to 3.7% growth in 2025 is predicted, driven by renewed private consumption and investment,” the European Commission said.
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