The return of restrictive measures at the end of the year has put the economy in trouble again. According to the Bank of Albania, economic activity improved in the third quarter of the year, largely influenced by the lifting of austerity measures in most countries.
The mitigation of the effects of the pandemic was reflected both in the improvement of the activity in the manufacturing sector and in the slowing down of the decline of the services sector. But the resumption of restrictions affected the economic slowdown. Uncertainty remains high, while hopes for a recovery are in vaccination.
"Economic activity marked a lighter contraction in the third quarter of 2020. GDP fell by 3.5%, from 10.2%, marking a gradual recovery after the easing of anti-Covid measures. The slight decline in uncertainty and the relative improvement in confidence curbed the declining dynamics of private consumption and helped boost investment. Also, the performance of exports improved slightly, although their dynamics was conditioned by the weakness of foreign demand.
Available quantitative and qualitative indicators are in line with our estimates for the continuation of the economic recovery in the last quarter of 2020. However, the recovery of economic activity remains fragile in the short run," said the Bank's monetary policy report of Albania for the first quarter of this year. The labor market also improved, from 50,000 jobs lost in the third quarter, 30,000 returned to work during the last 3 months of 2020. According to the report, economic performance is conditioned by the performance of the pandemic.
"Looking to the future, the Bank of Albania expects the recovery of economic activity to continue for the next two years. The increase in demand for goods and services will help increase the demand for labor and employment, further translating into wage increases and a gradual return of inflation to the target by 2022. These projections are based on the assumption of progressive reduction of the rate of spread of the pandemic during 2021. They also factor in the current trends of economic development in the country, the most positive outlook for economic activity worldwide, and require the maintenance of a stimulating monetary and fiscal environment for the next two years." said the Governor of the BoA, Gent Sejko.