The International Monetary Fund has predicted that currently increased costs in Albania will remain high until at least 2027, spelling potential misery for one of Europe’s poorest countries.
As per the latest global economic report, the IMF state that inflation in the country will reach 5.5% from 2% by the end of the year. High prices will continue into 2023 while inflation will drop to around 3.3%. The rate of inflation is expected to remain around 3% until 2027 the report noted.
These are the highest levels seen since 2004 when IMF started recording data for Albania. Between 2004 and 2021, inflation has fluctuated between 1.3% and 2.7%.
This is set to pose challenges for Albania which is still dealing with the consequences of the 2019 earthquake that killed 51, displaced thousands, and caused over a billion euros of damage. Just a few months later, the COVID-19 pandemic and a two-month total lockdown plunged the country, and it’s already fragile economy into uncertainty.
Those that will suffer most are lower-income households throughout the world, particularly in emerging markets and economies. Rising costs for food and fuel, as well as energy, could cause social unrest, it continues.
At the same time, the IMF halved the forecast for Albania’s economic growth from 4.5% in October to just 2%. This is due to the impact of the war, as well as increasing fuel and energy costs.
During February, inflation in Albania reached a record rate of 3.9% while the cost of basic food items increased by almost 7%.
The rate of inflation was at its highest in the last ten years and is related to the increased costs of food, energy, and transport. According to data from INSTAT 86% of the aggregate inflation for the month came from those three sectors.