Albania Watch: Economy powers ahead in Q3 2021
The recovery of economic activity has continued apace during Q3 2021 with GDP marking a growth rate of 7% yoy. Despite a slight inflation pick-up in the last couple of months, we anticipate that robust demand will continue to underpin GDP growth in Q4.
Q3 GDP growth in line with our prediction
The recovery of economic activity has continued apace during Q3 2021 with GDP marking a growth rate of 7% yoy, in line with our forecast of 7.1%. In addition, Q1 & Q2 2021 GDP figures were revised up by 0.1% and 0.5% respectively. The performance of the economy has been astonishing in Q2 2021 with growth at full steam (+18.4% yoy versus 17.9% previously reported).
Economy at full steam in the first 9 months of 2021
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| Source: Instat, Raiffeisen Research |
| data in %, yoy |
Trade & Industry were the main contributors to growth
Economic activity was mainly supported by “Trade” and “Industry” with a contribution of 2.4pp and 1pp, respectively. The contribution of “Construction” reached 0.4pp, with a significant decrease compared to previous quarters. Finally, low contributions continue to characterize “Agriculture” (0.1pp), a sector that has struggled since the second half of 2020. The other components of the sector of “Services” such as IT, Financial activities, Real estate, and Health marked positive but quite low contributions to GDP growth. Whereas “Professional activities” and “Entertainment” remained in negative territory by contributing -0.2pp and -0.1pp, respectively.
Contribution in pp to GDP growth in Q3 2021
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| Source: Instat, Raiffeisen Research |
Private consumption slowly recovering after the earthquake in 2019
On the expenditure side, Private and Public consumption posted a growth rate of 3.3% and 7.6% respectively. Gross fixed capital formation was up by 3.8%. Exports and Imports logged very high growth rates of 62.7% and 35.9%, respectively, amid a resumption of foreign tourist arrivals in Q3 2021.
Exports rebounding strongly in 2021
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| Source: Instat |
| data in %, yoy |
Following the latest figure we are keeping our full year GDP growth forecast unchanged at 8.8%. Despite a slight inflation pick-up in the last couple of months, we anticipate that robust demand will continue to underpin GDP growth in Q4.
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Fjorent RRUSHI
Albania Fjorent is the head of ALM & Research for Raiffeisen Bank Albania. After a MSc in International Business from the University of Trieste and an MBA from MIB School of Management in Italy he started as an Investor Relations financial analyst at the aerospace & defense company Leonardo in Rome. After that he moved to the Italian Stock Exchange in Milan promoting blue chip companies through roadshows with institutional investors and after the merger with London Stock Exchange was in charge of primary markets of potential to be listed companies in Eastern Europe. In 2011 moved back to his native country to join Raiffeisen Bank in ALM & Research team in charge of fund transfer pricing, liquidity management and IRRBB. After a period at Intesa Sanpaolo Bank Albania as Head of pricing starting from 2021 he is heading the ALM & Research of Raiffeisen Bank Albania. Apart from macroeconomic analysis of particular interest for him is the disruptive technological transformation impacting the banking system. Fjorent’s hobby is football and he enjoys theatre and has been an amateur player as a teenager.
Aristea VLLAHU
Albania Aristea is part of the ALM & Research team at Raiffeisen Bank Albania. She is currently responsible for Funds Transfer Pricing and Macroeconomic Research in Raiffeisen Bank Albania. Her previous experience in ALM at Raiffeisen included interest rate risk management, interest sensitivity of income and stress testing. She also worked as Investment Analyst at Credins Invest, an asset management company in Albania. She holds a BA in Economics and MSc in Finance & Accounting from University of New York in Tirana and currently is a Level III Candidate for the CFA exam.
The US Fed and the ECB have decided to reduce accommodation, albeit at very different paces. Inflation in CEE remains elevated, however, in addition to the steps taken by central banks, government measures are starting to show effect in some countries. Meanwhile, political developments remain in the limelight, with the new governments in Bulgaria and Czechia confirmed and sweared in respectively, and the tensions in B&H and in EE remaining in focus. |