Albania's economy is expected to expand by 5% in 2021, the International Monetary Fund (IMF) said on Tuesday, cutting its projection for 6.1% growth made in October.

In 2022, Albania's economic output is projected to grow by 4%, the Fund said in the April edition of its World Economic Outlook report.

"The increase reflects the additional fiscal support in some large economies, the recovery enabled by vaccines in the second half of 2021 and the continued adjustment of economic activity," the IMF said in a statement. However, the IMF warned that the forecast is accompanied by "great uncertainties".

Worldwide, central banks and governments have released trillions of dollars to combat the pandemic-induced recession.

Albania's economy shrank by an estimated 3.5% in 2020, according to the report.

The IMF also said that the country's consumer price inflation will increase to 2% in 2021 and 2.3% in 2022 from 1.6% last year.

The country's current account deficit is seen shrinking to 8.7% of GDP this year and 8.3% of GDP in 2022, from 9.6% last year.

Albania's gross domestic product (GDP) declined by about 3.31% in 2020, based on preliminary estimates, the country's statistical office said last week.

Compared to the region, Albania has experienced the lowest GDP decline in 2020 after Serbia (down by 1%), while the worst-hit country from the pandemic was Montenegro, down by 15.2%.

The economy in North Macedonia shrank by 4.5% and in Kosovo by 6%.

On a global scale, the IMF expects a rebound by 6% after the -3.3% recession from last year due to the drastic measures taken by countries to curb the spread of the virus.

According to IMF, global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. The outlook depends not just on the outcome of the battle between the virus and vaccines - it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis.

Global growth is projected at 6% in 2021, moderating to 4.4% in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.