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Albania Business Forecast Report Q2 2010Published by: Business Monitor International Published: Feb. 5, 2010 - 54 Pages Table of Contents
AbstractWith limited trade and capital market integration with Western Europe, Albania has managed toweather the global recession relatively well, and is estimated to have been one of only a handfulof states in emerging Europe to avoid a recession in 2009. That said, with a host of leading indicatordata continuing to show a significant slowdown in economic activity is currently underway,we project real GDP expanded by ‘only’ 2.5% last year (down from an estimated average rate ofgrowth of 5.9% between 2003-2008), and will likely grow by 5.1% in 2010. Albania’s banking sectorhas also emerged from the worst of the financial crisis relatively unscathed, though we note thatrising NPLs will likely lead to a significant deterioration in asset growth and profitability through themedium term.Having been among the last Eastern European states to transition away from communism, it isof little surprise that Albania is a relatively immature democracy. As a result, political institutionsremain in a nascent stage of development, which exposes the country to frequent bouts of extraparliamentaryopposition. With the likelihood of renewed outbreaks of social unrest relatively low,particularly when compared to some of Albania’s regional peers, the most pertinent long-termpolitical risk issue facing policy makers and foreign investors centres around the prospects foreventual EU membership. To this end, we caution that given numerous structural challenges likelyto undermine political stability over the long term, we maintain our view that EU membership is noton the cards until the tail end of our 10-year forecast. T he Albanian lek remains under substantial downside pressure, with the unit depreciating to anear record low of ALL138.05/EUR at one point on January 11. Going forward, we caution thatthe medium-term outlook for the currency is certainly weak, and we expect the unit to fall to furtherrecord lows against the euro over the coming quarters. Certainly, latest balance of payments datafrom the Bank of Albania supports our view that depreciatory pressures on the currency will remainpronounced going into 2010. Through the first nine months of 2009, the current account deficitwidened to EUR1.0bn, compared to a shortfall of EUR861mn through the same time period lastyear (an increase of 20.1% y-o-y). At the same time, however, the financial account recorded asurplus of EUR902mn through Q3, thereby covering only 87.2% of the current account deficit, andleading to a net decrease in reserves of EUR54.6mn. A lbania’s state-owned Albanian State Oil and Gas Production Company (Albpetrol)’s oil explorationunit will be privatised in 2010 according to a recent statement by the Minister for Economy,Trade and Energy Dritan Prifti. According to Prifti, the firm will be privatised due to ineffectivemanagement within the company. Given that Albania possesses the largest onshore oil reservesin Europe, we believe this privatisation will likely attract significant interest from foreign investors,which will be crucial for the country in its efforts at modernising its exploration and oil productioninfrastructure over the long term. Get Full Details About This Report >> |
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