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The European Commission has lowered Albania’s economic growth expectations to 2.7%, from the 3.7% it had previously forecast in its November report.
The review for the slowdown of the economy is related to the impact of the war in our country, which has led to a strong rise in prices, especially of food, fuel and energy.
This highlights the European Commission has increased uncertainties and is expected to curb consumption and private investment, while the government risks being burdened with a high level of public debt due to increased costs from electricity imports and subsidizing energy bills.
Under such conditions, pressure on the state coffers will increase, the report said, and the government will be forced to cut public spending.
“The high cost of subsidies and the increase in social support expected for 2022 will delay the reduction of the budget deficit to 2.7% of Gross Domestic Product by 2023, when the public debt ratio is projected to decrease to 70.9%.”
While inflation has currently hit its highest level in 20 years, according to the European Commission report it will stay above the central bank’s target of 3% and will fluctuate around 5% this year to gradually decrease next year.
While for 2023, the European Commission predicts an expansion of the economy by 3.1%, also this assessment with a contraction compared to the previous report of the institution.
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