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The consequences of the war in Ukraine will be felt for more than a year in the Albanian economy. These are the estimates of the Bank of Albania presented in the Financial Stability Report for the second half of last year, where the analysis focuses on the impact of the war.
According to the bank, the effects will affect the entire economic chain due to high prices that will further increase production costs, leading to significant decline in consumption and slowdown of the entire economy. Energy, cereals, construction and tourism are the sectors that will be hit hardest according to the central bank analysis.
But the risk, albeit indirectly, will be felt in the banking sector. This is because the price crisis is affecting the income of citizens and the performance of businesses, which according to banks may lead to their inability to repay loans taken on time.
In addition to the decline in consumption, the negative effects will be felt in investments that according to the bank are expected to decrease this year due to the situation, while the budget deficit is expected to expand further, putting the state budget in difficulty.
Although Albania has a low trade volume with Russia and Ukraine, which means that it is not directly affected in terms of foreign trade, the effects are inevitable as the country imports goods from other countries thus dependent on strong fluctuations in international markets. which are then reflected in rising costs of goods in the domestic market.
In conditions when all the assessments of domestic and foreign authorities speak of a slowdown in the economy as a result of international developments and meeting energy needs that remains the main challenge for the country, the Bank of Albania estimates that meeting them requires cooperation with it and the government in direction of fiscal good governance and undertaking deep reforms to overcome the crisis.
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