World Bank: Kosovo's annual economic growth will shrink to 3.1 per cent.

“While growth in the first half of 2022 proved relatively powerful, it is clear that the region is now heading towards another storm,” stated during the presentation of the report in Vienna, Austria, Sanja Madzarevic-Swiyster, World Bank senior economist and lead author of the report. “A combination of shocks is weighing heavily on the region's perspective. The tightest conditions of global financing, a slowdown of domestic and external demand, as well as weakening business and consumer confidence will certainly affect the region's financial sector”, it said.

In addition to extending funding conditions, the report stresses that the risks of a winter explosion of COVID-19 remain and global supply chains continue to be under pressure. “in the short term, governments should give priority to policy support for vulnerable layers, ensuring that measures are targeted and time-limited to minimize fiscal risks”, the report underlines.

Albania

For Albania, the World Bank expects economic growth to slow to 3.2 per cent, down from forecasts for a 3.7 per cent increase of the Albanian government, but also the international Monetary Fund. For the next two years, economic activity is expected to decline further, to 2.3 per cent in 2023 and 2.5 per cent in 2024, respectively, the lowest level in the region. For next year, the Albanian government forecasts an increase in the 2.6 per cent level, while the IMF anticipates nearly 2 per cent.

In its report, the World Bank notes that high inflation, translated especially in rising food prices and transport costs, will negatively affect the poorest citizens, curbing progress in poverty reduction. According to the World Bank in July, inflation of food and transport prices rose to 13.2 per cent and 19.7 per cent respectively.

<x0 inflation of food and energy are factors that can lead to poverty a relatively large number of people since these elements have a significant weight in the consumer goods basket, for these vulnerable groups”, noted during the report's presentation for Albania, Ilda Shllaku, senior economist of the Bank. According to her, the social assistance scheme, and the instruments to be used by the government, should be adjusted in time.

As for the Albanian government's fiscal administration project, World Bank Country Manager for Albania Emmanuel Salinas explained that the World Bank has been part of consultations undertaken by authorities. We understand that right now the government is trying to increase revenues, and this is perceived as an opportunity. The spirit of this bill has a number of dangers and we have communicated them to the government. So any decisions they make should be a decision on all relevant information in the hope of minimizing these risks during the effort to get the maximum out of this” decision, he said.

Against fiscal administration is clearly listed and the European Union but and the International Monetary Fund, under which Albania does not have the conditions for implementing an amnesty in the proposed form.

Kosovo

Economic growth slowed in early 2022 and economic activities in Kosovo were affected by global price increases, says the World Bank report, in which Kosovo's annual economic growth will shrink to 3.1 percent.

During the first months of 2022, economic growth lost momentum due to inflation and the energy sector crisis. As importator of food and energy, Kosovo is particularly vulnerable to imported inflation, which in August reached 13 per cent from 7.1 per cent in January.

The labour market, according to the report, continues to reflect chronic weaknesses and is characterized by the apparent gender imbalance, as well as the incompatibles of skills and migration of the labour force, reports VOA.