Gent Sejko: Current situation and prospective of the Albanian
economic development
Greeting speech by Mr Gent Sejko, Governor of the Bank of Albania, to the General
Assembly of the American Chamber of Commerce, Tirana, 17 November 2022.
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Mr President of the American Chamber of Commerce,
Honourable Minister Ibrahimaj,
Your Excellency Ambassador Kim,
Dear Ladies and Gentlemen,
It is a real pleasure to join all of you in the General Assembly of American Chamber of
Commerce (AMCHAM). Also, it is an honour to address to this Assembly and share
with you opinions on the current situation and prospective of the Albanian economic
development.
At the beginning, I would like to extend my consideration for the American Chamber of
Commerce. This Chamber - encompassing more than 200 member companies - is one
of the most important business communities in Albania. Through training activities,
promotion of Albania as a business destination and participation in discussions on the
development policies, it contributes in: improving the business climate and model;
attracting foreign investments; and strengthening the economic relationships between
the United States of America and Albania.
Nowadays, this collaboration becomes even more important, when businesses, in both
sides of the ocean, are tackling complex and unprecedented challenges. After two
years of the pandemic lingering, the military aggression in Ukraine triggered a new
economic reality we are facing with. In addition to substantial loss of human life, this
conflict caused headwinds in global markets of goods and in global supply chains. As a
result, inflation and uncertainty picked up sharply across the globe, weighing heavily on
those in needs, and brought about negative consequences on global growth.
Albania, as a small and open economy, is also experiencing this new created
environment and in turn becoming part of it. The soaring prices in global markets drove
up progressively inflation in Albania, which peaked at 8.3% in October. We deem, that
this high inflation is the main challenge for economic policies and operators in the
private sector.
We all are aware about the harmful consequences the high inflation has on households,
businesses and on the overall economy. It decreases the purchasing power of our
income, deflates savings, heightens uncertainty for the future, and reduces the
informing role of prices in the economy. It increases the financial cost and curtails the
ability of businesses and households to take well-informed decisions on consumption,
savings and investments in the future.
In this view, the priority of the Bank of Albania is the return of inflation to the target at a
shorter time. For that reason, we are engaged in a normalising cycle of the monetary
policy stance, by increasing the policy rate to 2.75% from 0.5% during 2022. This
normalisation aims at establishing a better supply-demand equilibrium for goods and
services, by inducing the adequate stimuli for both the monetary and financial stability
of Albania. This stability - as we have continuously emphasised - remains the crucial
precondition for the sustainable and long-term growth of the economy and for the social
welfare and equality.
Forward looking, projections in our baseline scenario suggest inflation will reduce in the
course of the next year, and return in our 3% target in 2024. Also, these forecasts show
the Albanian economy will continue to grow in the coming years. Despite the growth
will somewhat slow down the momentum in the short run, the stabilisation of monetary
environment and the reduction of uncertainty will pave the way for a faster economic
growth in both medium term and long term. Last, but not least, our forecasts suggest
that financial markets will continue to be calm, the foreign exchange rate relatively
stable, and the soundness of financial intermediaries, including the banking sector, will
not be jeopardised.
Allow me to highlight that this economic prognoses, first reflects the health of the private
sector in the Albanian economy. In recent years, this sector has marked a distinguished
progress, in terms of finding new markets, strengthening operational efficiency,
improving financial soundness, and enhancing its strategic vision. The rapid rebound of
the Albanian economy after the pandemic shock bests certifies this progress. I think
that the qualities that helped private sector in that period: care for the employees;
collaboration among businesses, both in horizontal and vertical plans; the right share of
costs in all the production chain; and the operational and financial flexibility will be
important elements for tackling high inflation.
In parallel, I believe that the banking sector will continue to financially support the
businesses, by orienting funds towards profitable projects and most productive sectors.
Last, our prior task, as public decision makers, is to take the adequate measures to
restrain the supply-side shock in causing long-term consequences in the soundness of
the Albanian economy. In this context, I assure you that the Bank of Albania will
continue to be entirely devoted to guarantee the price stability and financial stability of
Albania.
Dear ladies and gentlemen,
While, we have paid the right attention and in a timely manner to the consecutive
shocks we have suffered recently, I would like to conclude this speech by pointing out
that policy-makers and private sector's operators should keep in mind that structural
reforms are an indispensable instrument to strengthen the producing potential of the
country and to increase the competitiveness of products "Made in Albania".
These reforms turn even more important while we advance in our integration path to the
European Union.
I wish good proceeds to the Assembly!
Thank You!