2021 will mark a turning point for the recovery of the Albanian economy. Assuming that the epidemiological situation will come to normalization, the Bank of Albania expects expansion of consumption and investments, increase of the volume of economic activity, increase of employment and improvement of the financial situation of businesses and households.
This prediction is based on several factors. First, it is built on the assumption that the shock we suffered in 2020 - which did not come from within the economy or financial system - will disappear in 2021. With the expected end of the pandemic, we expect a gradual normalization of the movement of goods, people and services. Second, it relies on the fact that the Albanian economy appeared resistant to the shock. Although the pandemic brought significant losses and / or debt increases for a large number of economic operators, the overall economic, monetary and financial stability of the country was not affected. This means that, as a whole, the production and service structures of the country have remained operational and that their financial situation does not pose a serious obstacle to the resumption of economic activity. Third, we estimate that the combination of fiscal, monetary and macroprudential policy continues to be encouraging for the growth of aggregate demand.
Finally, it is worth noting that - in a medium and long term perspective - the Albanian economy has been and remains in a positive development trend. This trend reflects the growing sophistication of the private sector, the encouraging prospects for European integration, the growing support with bank loans, as well as the expansion and improvement of infrastructure. Economic growth will help improve all economic indicators. It is expected to be accompanied by an increase in employment, an increase in income for the private and public sector, as well as an improvement in their debt position.
However, it is worth noting that the recovery of the economy will be a gradual process. Although increasing, the volume of economic activity is expected to reach the pre-crisis level only in 2022. The performance of the economy over the next year is surrounded by downside risks. For this reason, economic policies must continue to be cautious, in terms of maintaining a fair balance between the need to provide macroeconomic stimulus and the need to maintain monetary and financial stability.