Covid-19 pandemic and the earthquake of November 26, 2019 made poverty in Albania more aggressive. According to the latest World Bank estimates on relative poverty (population living on less than US $ 5.5 per day), between 28,000 and 112,000 poor people have been added to Albania in 2020.

In the conservative assessment of the World Bank, the strata included in grades 2-4 are most affected (for the purpose of measuring poverty, the population is divided into 5 classes with 20% each, where class 1 belongs to the 20 percent with lower income and grade 5 him with more).

"In 2020, the poverty level in Albania is projected to have increased by 1 percentage point (28,000 young poor). Our more conservative method of estimating poverty predicts a larger decline in income for workers in grades 2-4 of income distribution, compared to the standard GDP-based forecast, resulting in an estimated poverty increase of 4 points percent, equivalent to 112,000 poor young people, ”the Bank report said.

The report states that Albania has the highest level of poverty in the Western Balkans; about a third of its people live on less than $ 5.5 a day (in PPP 2011 — gross domestic product per capita based on purchasing power parity). Across the region (Albania, Kosovo, Montenegro, Northern Macedonia, Serbia, Bosnia and Herzegovina) it is estimated to have increased between 165 and 336 thousand poor by 2020. In the conservative version, almost a third of the poor added in the region belongs to Albania- Monitor Note.

In 2020 Serbia had the lowest estimated increase in poverty (0.1 pp); The estimated increase in poverty for Kosovo was 3.9 pp and for Montenegro 5.5 pp. A more conservative estimate for Albania and northern Macedonia predicts a 4 pp increase in poverty in both countries.

It is estimated that 70-90 thousand poor young people have been added to Kosovo. Kosovo's poverty rate fell from 24.4 percent in 2017 to an estimate of 21.4 percent in 2019. During the pandemic it is estimated that poverty has increased by 4-5 percentage points.

In Montenegro, the pandemic erased 6 years of poverty reduction. The simulation analysis suggests that poverty increased from about 14.5 percent in 2019 to about 20 percent in 2020.

25-92 thousand poor people were added to Northern Macedonia. The poverty rate decreased from about 35.8 percent in 2009 to 17.9 percent in 2018, but the pandemic estimates that this indicator increased again by 4 percentage points.

Serbia is the only country in the region that has managed to maintain stable indicators of poverty, after a mild recession that the country went through, with a decline of only 1%. As a result, it is estimated that poverty stood at around 17.4 percent in 2020, close to its 2019 level, and will resume its decline in 2021.

For Bosnia and Herzegovina, the latest poverty assessment is from 2015, where poverty is estimated at 16%. The pandemic has negatively affected the labor market and poverty, while recovery is expected in 2021.

Poverty decreased slightly in Albania in 2014-2019, despite economic growth.

The report states that in Albania, between 2014 and 2019, poverty fell by only 1 percentage point, despite the fact that the average annual GDP growth was 3 percent. The double shock, the earthquake and the pandemic totally erased the results achieved earlier.

Total employment fell by 1.8 percent in 2020, while labor force participation fell, especially among young people. Unemployment has risen steadily since the second quarter of 2020, especially for the 30–64 age group. At the end of 2019, monetary poverty and material deprivation increased in the seven municipalities most affected by the earthquake.

The most conservative method of the World Bank predicts an increase in the poverty level for Albania by 4 percentage points during 2020, reaching 44%. This estimate predicts a larger decline in income for workers in grades 2-4 of equivalent income to 112,000 poor young people.

Welfare improvements in the Western Balkans stalled in 2020 as the COVID-19 crisis pushed economies into recession. Poverty reduction in the region stopped, and poverty increased by about 2.3 pp, or 336,000 poor young people in the region.

The estimated impacts of COVID-19 on poverty vary across the Western Balkans, reflecting the significant shift in the impact of the crisis on the economy.

In most Balkan countries, poverty increased due to the sharp decline in the incomes of urban households close to the poverty line working especially in construction, services and manufacturing.

The World Bank used two methods to assess potential poverty, the impact of the COVID-19 pandemic in 2020, and potential recovery in 2021: (1) forecasts based on sectoral GDP growth, and (2) detailed microsimulation of shocks and responses of policies.

(Source: Monitor)