The latest economic crisis could disrupt Albania’s robust recovery and positive efforts to reduce poverty according to the World Bank’s report on the Western Balkans, “Steering through the Crisis.”
“A robust recovery took place in Albania in 2021, thanks to policy stimulus and resurgence of travel, construction, and extractive activity… Real GDP increased by 8.5 percent, fully recovering from the recession caused by the pandemic,” reads the WB’s country note.
“Poverty in Albania is estimated to have fallen significantly to 22 percent of the population in 2021, but inflation could disrupt this trend,” says the report which finds that employment demand in Albania helped lift thousands out of poverty in 2021.
“Albania and Kosovo account for 82 percent of the regional poverty decline, and their poverty rates are estimated to now be below their 2019 levels.”
While employment in Albania remained below pre-pandemic levels, the country’s 52.9% employment rate remains the highest in the region. Albania also has the highest female labor participation rate at 53.9%, and lowest youth unemployment rate—at 20.6 percent.
The World Bank warns, however, that “Albania has been impacted by global developments and is facing new challenges that threaten economic and poverty prospects in 2022.”
The war in Ukraine is affecting stability and growth, with GDP growth expected to slow down to 3.2% in 2022. This is on par with the 3.1% growth forecast for the whole region.
“Rising energy and food prices are expected to weigh heavily on low-income households in the Western Balkans, which spend a much higher share of their income on basic needs such as food and heating,” said Linda Van Gelder, World Bank Country Director for the Western Balkans.
In Albania, consumer prices increased by 3.7 percent with prices for food and nonalcoholic beverages increasing by 6.7 percent.
The World Bank is the latest in a list of organizations that have downgraded the region’s growth forecast as a result of the war in Ukraine. Both the Vienna Institute and the International Monetary Fund have issued similar warnings.