Lecture by the Governor of the Bank of Albania, Mr. Shkëlqim Cani, at the Faculty of Economics in the University of Gjirokastra

Publication date: 14.05.2004


The Governor of the Bank of Albania, Mr. Shkëlqim Cani held a special lecture with the students of Economics Faculty, University of Gjirokastra. The topic of the lecture, that was held together with the deputy director of Research Department, Bank of Albania, Mrs. Evelina Çeliku was: "The Usefulness of Confidence's indexes for the Central Bank". The purpose of establishing the confidence's indexes for both clients and consumers, stated Mr. Cani, mainly consists in knowing tendencies of the real sector of economy, in collecting information, as complete as possible, on the analyses that contribute to the decision - making of Bank of Albania via the results that are generated from a comprehensive observing process.

According to the lecturers, the necessity of designing an index system of confidence is related to the development of forecasting systems for the short - term future in the real sector of economy; the fulfillment of some lacks on the present information system, particularly on the one of having as quickly as possible the statistics on the real sector of economy (economic activity, employment, prices, investments, competitiveness, financial situation, savings, public perceptions on inflation, etc.); the support given to the assessments on inflationary pressures of production origin (production prices, increasing or decreasing producing activity); the establishment of a range of data on a sufficient period of time that enable the performing of statistical analyses and then of the econometric ones.; the comparison of the inspection data to those that come out from official statistics and the analyses of the resulted variance, of the inspection confidence degree and of the official statistics themselves, etc.

The world experience of establishing the confidence indexes ranges has shown the presence of a strong linear correlation between the expectations of confidence inspection and the proved indicators on the real economy sector.

According to the Business Confidence Index's assessments, for the period 2002 - 2004, businesses are more optimistic on the short - term future, and this results on expectations higher than the present value of respective quarter. That means, there is a kind of assessment of the economic situation for the future periods of more positive colors than the one they state later on or than it is proved to them. This particularity and other problems which are reflected during the work and analyses of results, allow these indicators to continue being under testing process. Although the Bank of Albania has not published figures, it makes use of the data received from the confidence's indicators for its analysing purposes. We deem that still it is not the time their use may be extended more to attract other interested people. The working process continues to be accomplished with seriousness in order to achieve their publication in the near future.

Referring to the business confidence's indicators on the economy (where there are aggregated the data about 600 businesses of the production sector, of construction and services) and the information provided by the official statistics, it is observed the establishment of a cycle having an increase during the third quarter of the year. This is a verified tendency that bears witness to a fair sensitivity of the Albanian businesses. The tendency of prices, in general throughout 2002 - 2003, is verified and this is a very important information on the decision - making for the central bank. Employment has also followed the tendencies that are verified by the official statistics as well. The factors that influence the economic activity are justified to a certain extent by the specific situations of economic and political developments in the country.

Another confidence indicator, that Bank of Albania has started to create since one year now, is the one of Consumer's Confidence. The index of consumer's confidence is interpreted as a forecast for the performance of economy for a short period, as it tends to dictate changes on the economy cycle, that is a decrease of consumer's confidence on the economy is interpreted as a decrease of consumption in the future and vice - versa. For some economies, where the consumers' consumption counts for a considerable weight of GDP, this indicator is rather important, as it is among the fewest to measure the sensitivity of consuming expenses.

Bank of Albania quarterly examines about 1206 consumers in urban areas all over the country. The results of four surveys conducted up to here comply with the statistical data, particularly with the data on inflation, as a statistic having a more common frequency. We are, from this fact, optimistic that the survey we are conducting now offers a utilizable information on some economic indicators to which statistics are missed or reflected of a considerably delay.

Mr. Cani, concluding, stated that the confidence's indicators are vectors of the tendencies of economic activities in general. They complete the frame of statistical information and help the process of decision-making either for the institutions of public administration or for businesses and investors involved in the private sector of the economy. The results on the confidence's indicators extend valuable information also on the economic tendencies according to sectors, thus assisting the right direction of sectoral policies.

As a conclusion, Bank of Albania continues to carefully examine and use the indexes for purposes of internal analyses. Their continuous improvement remains the main objective, based on the EU standards, to go into the publication of as much as qualitative and significant indicators, to be widely accessible, like in the developed countries from both public and private institutions, either domestic or foreign businesses, and from the Albanian consumers as well.