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The annual cost of living has increased by 9.4% for poor families

2023-04-28 08:06:58Biznes SHKRUAR NGA REDAKSIA VOX
The annual cost of living has increased by 9.4% for poor families
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The cost of living in our country, and especially for the poor, has increased more than inflation shows, analyzed the World Bank in a study for the countries of the Eastern Europe and Central Asia region (ECA Region).

In 2023, the Cost of Living Index for poor families increased by 9.4 percent in Albania.

The Bank's data show that this year relative poverty at USD 6.7 per day covers more than 23 percent of the population. For almost a quarter of the country living in poverty, the cost of living after the start of the war in Ukraine has increased significantly.

In the case of Albania, the growth has been higher for the poor in relation to the middle class and the rich. The average cost of living in Albania increased by 8.8% at the beginning of 2023. For the middle class the costs increased by 8.9% and for the rich only by 7.8%, but for the poor the increase was by 1.6 percentage points higher than for the rich.

Living costs became more difficult after the start of the war in Ukraine. The poorest and mainly those living in rural areas were most affected. This trend was evident in most European and Asian countries, with the exception of Belarus, where wealthier households experienced higher inflation than poorer households.

The average difference in inflation rates between the poorest and richest households is more invisible in developed EU countries than in developing countries. This shows that the phenomenon of inequality in developing countries is becoming more and more acute.

The Western Balkans is projected to experience a slowdown in the economy due to spillover effects from the Russian occupation of Ukraine, such as lower private consumption, tighter global financial conditions and a decline in demand from the European Union.

The region's GDP is projected to grow by an average of 3.4 percent during 2024–2025.

Downside risks dominate the outlook and are mainly related to persistent inflation eroding incomes and consumer confidence.

Further tightening of global financial conditions may hinder access to external market financing. Weaker growth in the euro area could reduce remittances to the Western Balkans, causing a fall in private consumption, especially in Albania, Bosnia and Herzegovina and Kosovo.

The increase in geopolitical tensions in the Region also poses a risk due to tensions (Kosovo-Serbia and Bosnia-Serbia).

The World Bank further analyzes that political fragility in the Balkans exacerbates insecurity, slows down vital reform processes and diverts focus from structural economic challenges.

Energy tariff adjustments and subsidies for state-owned energy companies will help restore fiscal balances, especially in Albania, Macedonia and Serbia, the Bank emphasizes.


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