BANK OF ALBANIA
Launching of the EBRD Transition Report 2022-2023
Publication date: 30.01.2023
On 30 January 2023, at the premises of the Bank of Albania, the EBRD Transition Report 2022-23 was presented.
In his opening remarks, the Governor of the Bank of Albania, Mr Gent Sejko, stated that the EBRD Transition Report remains a professional and authoritarian analysis about the performance of transition economies in convergence process, fully reflecting the short and medium-term challenges they face, as well as a precious guideline of stabilisation and development policies needed to support a sustainable economic and social progress.
In this context, the Governor said, that it is a special pleasure for the Bank of Albania to host again this event, which brings together researchers of this field, important actors of public and private sectors and representatives of the financial industry.
“The remit of this year’s Report are the economic headwinds arising from the war in Ukraine, considered in both short- and-medium term as well as in long-term perspectives. In economic perspective, this conflict was a strong supply- side shock across all the European continent. This shock was reflected in surged inflation rate and heightened uncertainty, worsened trading terms, expanded current account deficits, and tightened financial conditions”, emphasised the Governor.
Next, Mr Sejko added that within a short time of period, after the end of the pandemic emergency, the regional economies had to face another major challenge, which jeopardised the economic and financial stability and harmed the economic growth prospects for the future.
Naturally, the Albanian economy was not an exemption of this reality. After a rapid and thoroughly economic rebound in 2021, the external supply shock was directly transmitted in the production costs and consumer prices. Thus, inflation accelerated and has reached unprecedented rates unseen for some decades.
Governor Sejko pointed out that in the framework of the primary objective of safeguarding price stability, the Bank of Albania has firmly implemented a normalisation process of monetary policy stance. This process was materialised in a progressive increase of the policy rate, in view of an open communication of our expectations for the future, as a continuous reaffirmation of the Bank of Albania’s willingness to take all the necessary measures for the return of inflation to target, within a reasonable time horizon, and at rather lower costs on the economic activity.
Then, the Governor highlighted that theses economic policies helped in: maintaining a relatively low inflation level compared with regional countries; reducing uncertainty; and preserving financial stability. He added, that the Bank of Albania’s projections suggest inflation will continue to set on a downward trajectory during 2023, and will return to target within the first half of 2024.
In terms of the main messages addressed in this Transition Report, Governor Sejko emphasised the conclusion that the geopolitical conflicts and tensions bring inevitable crucial structural changes, which are accompanied with increased migration and long-term consequences for both home and ghost countries. Also, the geopolitical tensions are reflected in an increased protectionism, production chain fragmentation and re-orientated foreign direct investment flows towards friendly countries, as well as a decelerated globalisation process. In addition, they reduce attention on structural reforms, which have been and remain the sole instrument for a more rapid and sustainable economic growth.
Concluding, the Governor highlighted that the duty of policy-makers, in both national and international level, is to know these challenges and take care for minimising their consequences. In particular, the conduction of structural reforms, which has slowed down since the outbreak of the pandemic across all regional countries, should be restored as a national strategic priority across all transition countries.
Governor Sejko thanked the EBRD representatives for the valuable contribution and concrete support through financial investments in key areas for the economy of Albania, and invited them to continue considering the potential that Albania has to offer.
The high representatives of the EBRD presented the EBRD Transition Report 2022-23, as well as the assessments on the Western Balkans and responded to the interest of the attendees and journalists.