The COVID-19 pandemic has curbed economic activity in Albania, as well as in all countries of the world, at an unprecedented rate.
The peak of this negative trend - as reported by the Albanian economic magazine Monitor - was reached in April, with at least 60.000 people losing their jobs.
Sales, exports, consumption and investments showed a double-digit decline, while public and private sector debt grew at an alarming rate. The first post-quarantine weeks have shown that the recovery of the economy will be a slow and difficult process, even if it is currently impossible to define precisely how and through which scenarios the recovery of the economy of the country of the Eagles will pass.
In this sense, the international financial institutions, the local ones and the representatives of the main sectors of the economy have built different scenarios, from the most optimistic, which foresees an economic recovery already from next year, to the most pessimistic one, which foresees a negative impact of the COVID -19 on the economy for over five years.
The best scenario: 8% growth in 2021
The International Monetary Fund and the World Bank - in the April projections - forecast a 5% decrease for the Albanian economy in 2020 and a rapid recovery of 8% in 2021.
According to this scenario, after the drastic drop in the economy due to COVID-19 this year, a temporary boom in demand will follow in 2021 which will favor the recovery of the sector. Consumption and investment will return to an even more frenetic pace (everyone will want to make up for the time lost during the quarantine) thus promoting the restoration of all the jobs that have been lost in recent months.
An analysis that seems to be very optimistic given the current situation. The new increase in contagions to numbers that had not been reached even during the pandemic peak has increased the lack of confidence in the economy, which will most likely reflect this trend for a long time to come.
The real scenario: 4% growth in 2021
The scenario closest to the current reality is that published by the European Commission. The EU analysis predicts an economic decrease of 5% in Albania in 2020 and a growth of 4,2% in 2021.
Specifically, the European Commission expects this year to drop by at least 4,2% in the consumer sector, 7% in investments and 25% in exports; in the same way, the tourism sector will also record negative trends. Furthermore, this scenario foresees the permanent loss of the production failure during the pandemic but also an early return of the economy to the pre-Covid moment once the restrictions have been eliminated.
However, for Albanian institutions, this too seems to be a very optimistic possibility: according to their estimates, in fact, the country's economic recovery will need a minimum of two years.
Another real scenario: recovery in 2-3 years
According to the Central Bank of Albania, the losses caused by COVID-19 will be absorbed by the Albanian economy in the next two or three years. This analysis, slightly pessimistic but very close to the reality of the country of the Eagles, takes into account the fact that the negative consequences of the pandemic will continue well beyond the end of the restrictions.
According to this scenario, the Albanian economy will register a growth of 2% in 2021 and 2022 (half compared to what predicted by the Bank of Albania in the pre-Covid projections) accompanied by a gradual recovery in GDP.
The worst case scenario: repercussions on the economy for several years
The worst-case scenario foresees repercussions on Albania's economy for the next 5-6 years, but is taken into consideration by international and local institutions only as an extreme case. It is almost impossible, in fact, that this scenario can be realized given that it takes into consideration a very long quarantine period and that the economy has in any case already shown signs of recovery.
This analysis also takes into account the fact that the effects of the pandemic on GDP are permanent: the lack of investment during the quarantine, the review of global supply chains, the permanent change in fiscal policy and the slowdown in productivity growth push - according to this scenario - the trajectory of GDP at a lower level than expected. A hypothesis which fortunately does not reflect the current situation of the economy in the Land of Eagles.
This article was originally published in the Albanian language on monitor.al
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