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Despite the price crisis, the Albanian economy grew by about 6% in the first quarter of the year.
The expansion of the economy according to the Institute of Statistics has relied mainly on the construction and real estate sectors that held the main weight this period, while giving a positive contribution by supporting growth and trade and transport.
But the opposite has happened with agriculture, the largest sector of the economy that seems to have slowed growth. Its contribution to the economy this quarter according to Instat was only 0.01%, making the sector that is facing a strong rise in prices of raw materials as a result of the war remain almost in the number one spot.
Meanwhile, other branches such as entertainment and other services that are closely related to the well-being of citizens have made a negative contribution to the economy, as Albanians seem to have spent less on these services, orienting their spending towards food and basic needs.
Final consumption of the population, which is the main burden of the economy, increased by 8.6% this quarter, while government spending on the other hand slowed down, shrinking by 2.8% compared to the same period last year.
Although in these indicators of the economy the price crisis as a result of the war in Ukraine does not seem to be reflected for this first period of the year, the consequences of the shock are not going to be short-term in the economy. Inflation has reached its highest level in two decades and is expected to stay above the central bank target until at least next year.
Both the government and the Bank of Albania, as well as foreign international institutions, have lowered their expectations for the country’s economic growth. In their scenarios, although in no case is there talk of a recession, the Albanian economy will not exceed 3.5% growth this year.
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