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The Governor of the Bank of Albania, Gent Sejko, held a meeting with the Minister of Finance and Economy, Delina Ibrahimaj, to discuss the current situation and the expected economic progress of the country.
In this meeting were assessed the risks that the Albanian economy may face, following the escalation of the Russia-Ukraine conflict, as well as the necessary measures to cope with the situation. The impact of this conflict on the world economy has begun to be visible, both in terms of rising prices of some basic items, as well as in terms of increasing investor and financial market uncertainty.
For this reason, the Bank of Albania and the Ministry of Finance and Economy are working, with intensity and responsibility, to assess Albania’s economic, trade and financial exposure to the countries involved in the conflict, as well as the expected impact of this conflict in the future. . Estimates so far suggest that the country’s economic and financial health remains solid and the expected impact of geopolitical tension is expected to be limited and manageable.
More specifically, the Bank of Albania estimates that – in its entirety – Albania’s direct trade and economic exposure to Russia and Ukraine is low. Also, the economic and financial stability of the country has been consolidated. The exchange rate appears stable and the foreign exchange reserves remain at a sufficient level. In particular, the banking sector operates normally, with good indicators of capitalization, liquidity and performance, as well as low exposure to the region in conflict.
Our preliminary resistance tests show that the Albanian economy has enough room to withstand possible shocks coming from direct exposure to countries in conflict. These shocks may stem from the reduction or cessation of trade flows, from rising prices for certain products or from increased uncertainty in international financial markets. If the conflict remains contained, in its temporal and geographical dimensions, these shocks will leave only transient traces on economic activity and inflation.
The Bank of Albania and the Ministry of Finance and Economy shared the opinion that the attention of monetary and fiscal policy should be oriented towards maintaining the economic and financial balances of the country, using the instruments and sufficient space available to mitigate possible shocks. Subsequently, both institutions expressed their readiness to take any necessary action to minimize the possible negative effects. Coordinated action will be crucial to mitigate risks and navigate safer in the coming challenging period.
Also, the Bank of Albania and the Ministry of Finance and Economy shared the opinion that the situation should continue to be closely monitored. Further escalation of the situation and potential expansion of the conflict to other countries would produce a new economic reality and would require more comprehensive measures to manage the situation.
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