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The Governor of the Bank of Albania, Gent Sejko, on Wednesday stated that the inflation in the country marked a rapid increase in the fourth quarter, reaching 3.7% in December.
Sejko said that contrary to what was predicted, inflation will return to the target of 3% only in 2023 and not this year. Even during 2021, inflation was in high numbers, but this was influenced by rising prices and oil.
“Inflation is found in the prices of all consumer basket items. Its acceleration was dictated by rising processed foods and oil prices. Inflation is expected to return to the target in a stable manner during 2023, reflecting the balance of demand and supply, employment growth and wages in line with productivity“, Said Sejko.
He stressed that the strong rise in prices of food, energy, transportation costs, has had a significant impact on inflation in the fourth quarter.
“According to INSTAT, the Albanian economy grew by 10.4% during the first 3 quarters of the year, the information signals its further expansion in the fourth quarter. Our analysis shows that economic activity in the country has exceeded its pre-earthquake and pre-pandemic level, illustrating the rapid recovery of demandSaid the Governor.
According to Sejko, even with increasing trajectories, the momentum of economic growth during 2022 will be slower than last year.
The Governor stated that the Supervisory Council of the Bank of Albania left the key interest rate unchanged.
He said that the Supervisory Council reviewed and decided on the approval of the decision “On the suspension of profit distribution by banks.” Based on this decision, the distribution by banks of the profit carried over from previous periods, and the profit realized during 2021, is suspended until the end of 2022.
This measure of the supervisory authority, aims to provide support to banks, mainly through increasing their ability to absorb potential potential losses and to support lending to individual customers and businesses during this period.
Sejko claimed that despite the fact that the economy is growing, problems are being encountered in employment.
“Globally, the recovery of economies from the onslaught of the pandemic is strong but unequal between countries. Also, it continues to be characterized by problems in supply chains and labor shortages. Strong demand for goods and services, supply constraints and high electricity prices have pushed up global inflation. In this context, the perspective of global monetary policy is towards normalization, which is also reflected in the behavior of international financial markets.“, He added.
Regarding the economic situation, the Governor said that the growth will continue in the coming years.
“The Albanian economy is projected to follow an upward trajectory in the coming years. The growth of activity is expected to be supported by both domestic and foreign demand, reflecting favorable financing conditions, improving confidence and balance sheets of the private sector, as well as increasing demand in partner economies. Despite the high levels of 2021, economic growth rates are expected to decrease during 2022 and onwards“, Said Sejko.
He reiterated the appeal to reduce public debt, as it would increase fiscal sustainability.
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