Albania's economy is projected to grow by 3.6% in 2023 after expanding by 3.7% last year, the International Monetary Fund (IMF) said on Tuesday, improving its April forecast by 1.4 percentage points (pp).

In 2024, Albania's gross domestic product (GDP) will increase by 3.3%, the IMF said in the October 2023 edition of its World Economic Outlook report, keeping unchanged the forecast it made in April. The report was presented during a press conference at the Bank of Albania. The Second Deputy Governor of the Bank of Albania, Natasha Ahmetaj, held a welcoming speech before the presentation.

Regarding the main economic issues, Ahmetaj said that with the rapid rise in prices, almost all major central banks started a rapid normalization course of monetary policy to fight inflation, to avoid an erosion of the purchasing power of individuals and monetary and financial instability. She emphasized that interest rates in systemically important central banks are the ones that mainly direct the trends of world monetary policy.

According to the data of the report, average consumer price inflation is forecast to abate to 4.8% in 2023 and 4% in 2024, from 6.7% last year, the IMF said. Albania's current account deficit is projected to stay at 6% of GDP in 2023, the same percentage as in 2022.

The IMF expects that the economy of the Emerging and Developing Europe area will expand by 2.4% in 2023, after growing by just 0.8% last year, increasing its April forecast by 1.1 pp.

In its latest World Economic Outlook, the IMF left its forecast for global real GDP growth in 2023 unchanged at 3.0% but cut its 2024 forecast to 2.9% from its July forecast of 3.0%. World output grew by 3.5% in 2022.

IMF chief economist Pierre-Olivier Gourinchas said the global economy continued to recover from COVID-19, Russia's invasion of Ukraine, and last year's energy crisis, but that diverging growth trends meant "mediocre" medium-term prospects.

Gourinchas said the forecasts generally pointed to a soft landing, but the IMF remained concerned about risks related to China's property crisis, volatile commodity prices, geopolitical fragmentation, and a resurgence in inflation.

A fresh risk emerged in the form of the Israel-Palestinian conflict just as officials from 190 countries met in Marrakech for the IMF and World Bank annual meetings, but came after the IMF's quarterly outlook update was locked down on Sept. 26.

Gourinchas told Reuters it was too early to say how the major escalation would affect the global economy: "Depending on how the situation might unfold, there are many very different scenarios that we have not even yet started to explore, so we can't make any assessment at this point yet."

He said the IMF was monitoring the situation, noting that oil prices had risen some 4% in recent days, reflecting concerns that production or transport of oil could be interrupted.

Research by the IMF showed a 10% increase in oil prices would dampen global output by about 0.2% in the following year and boost global inflation by about 0.4%, he said.

dic – Deputy Governor Natasha Ahmetaj during the presentation of the IMF report