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Vienna Institute: The Albanian economy will grow by 4 percent. Loan concern for real estate

2024-10-17 11:04:18Biznes SHKRUAR NGA REDAKSIA VOX

Vienna Institute: The Albanian economy will grow by 4 percent. Loan concern for

Unlike the World Bank, the Institute for Economic Studies in Vienna, WIIW, predicts that Albania's economy will grow by 4% by the end of the year.

For the next two years, the Institute predicts a slowdown in economic growth to 3.8 and 3.9% for 2025-2026.

For the Institute, the rapid increase in loans for real estate and the overvaluation of the lek, which has damaged exports, is a concern.

"Economic growth is projected to reach 4% in 2024. Inflation remains low and stable. However, vigilance is required, as the demand for real estate loans is increasing rapidly. The overvaluation of the currency has damaged the export of goods. The growth of tourism is continuing, but this will not prevent the further expansion of the current account deficit. Foreign direct investment (FDI) inflows will remain high, with the energy and manufacturing sectors benefiting the most," the report states.

Both this year and next year, the EU member states of Central and Eastern Europe are still on track to significantly outperform the euro area.

Despite the uncertain international environment, the economies of most countries in Central, Eastern and Southeastern Europe are showing strong growth.

However, some of those countries with strong ties to German industry – such as the Czech Republic, Slovakia and Hungary, as well as Romania – are feeling the brunt of the recession in Germany. However, their economies are likely to grow again next year.

The main driver of growth in the EU member states of Central and Eastern Europe has been and remains private consumption, due to the significant increase in real wages; meanwhile, the industry is in recession.

The crisis in Germany is weighing on many economies in the region, limiting their growth prospects. This is also reflected in the decline in the production of the automotive industry, which accounts for about a third of Slovakia's economic output and approximately 15% of GDP in the Czech Republic, Slovenia and Hungary.

However, there is an internal lag before this decline in production is felt, so further difficulties are expected.

Overall, the WIIW forecasts average growth in 2024 of 2.2% for the region's EU member states, a downward revision of 0.4 percentage points in the summer forecast, with growth expected to reach 2.9% in 2025.

However, both this year and next, EU member states of Central and Eastern Europe are still on track to significantly outperform the Eurozone (which will see growth of 0.6% in 2024 and 1.4% in 2025 ). The Visegrad states – Poland, the Czech Republic, Slovakia and Hungary – and Slovenia are projected to expand by an average of 2.3% in 2024, rising to 3.1% in 2025.


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