In the baseline scenario, the Albanian economy is expected to record a sharp drop during 2020. This was the conclusion at the end of a meeting realized by the Bank of Albania via the electronic means of communication, with the IMF Mission, in the framework of the Post-Program Monitoring in Albania, throughout the last two weeks.

"In reflection of the intensity of social distancing measures, the economic fall is expected to peak in the second quarter, and to gradually recover in the next two quarters. Further, under the assumption of a favorable epidemic performance, the Albanian economy is expected to grow and recover the lost volume of the economic activity in the next two years.  This performance will provide for the gradual return of inflation to target.

The materialisation of this scenario implies the continuation of the accommodative monetary policy during the continuing year, the gradual withdrawal of the fiscal stimulus, and the return of the regulatory focus in guaranteeing the long-term soundness of the banking sector.

On the other hand, the Bank of Albania continues to highlight that the balance of risks remain titled to the downside. These risks arise from a possible worsening of the epidemic situation, the further weakening of the economic situation in our trading partners, the heightening of uncertainty in both domestic and external environments," said the head of the bank, Gent Sejko adding that the Bank of Albania is committed to continue the dialogue with the financial market and with all national and international partners, to fulfil its mission and objectives.

The Bank of Albania shares similar views with the Mission regarding the development stage of Albania, the challenges that lie ahead, and the necessary policies and measures for addressing them.

The impact of Covid-19 pandemic in Albania has been the main topic of discussions in both economic and financial areas.

The fall in the demand, difficulties in the internal and cross-border movement of goods and persons, and the increase of uncertainty, have driven to the drop of the economic activity and have tackled financial difficulties to Albanian businesses and households.

In macroeconomic view, the fall of economic activity is reflected in weak inflationary pressures, increase of unemployment and expansion of both external and public debts of Albania. 

In microeconomic view, the drop in the economic activity has posed financial difficulties to Albanian businesses and households.