On the other hand, the reduction of foreign currency inflows is accompanied by deterioration of the balance of payments indicators and the arising of depreciating pressures on exchange rate, underscoring the role of current account stability on macroeconomic and financial balances at home and the need for taking precautions to guarantee it. World economic environment is characterised by further deepening of economic and financial crises. Curtailing of consumption and investments, under the presence of high rates of public and private debt and underlined macroeconomic imbalances, has made the world economy experience the sharpest economic downturn in last 50 years. The developed countries, USA, Euro-zone, United Kingdom and Japan have followed easing monetary and fiscal policies, aiming to hamper the economic downturn and improve the financial and capital markets situation. Under their impact, the latest data signal relative improvement signs of some macroeconomic indicators. Tensions observed over the previous periods have relaxed and the main financial indicators have shown recovering signs during the last months. In the meantime, the world inflation rates have been falling, owing to low raw materials prices and low use of productive capacities, in the presence of a low aggregate demand and increasing unemployment. The economic activity downturn worldwide was associated with contraction of world trade, tightening of financial conditions and dropping of economic agents’ confidence The direct impact on emerging countries, such as Albania, is the fall of demand for their exports, decline of foreign direct investments and tightening of lending terms in world markets.

Particularly concerning is the low degree of export to import coverage, signalling structural problems of this deficit due to still-low competitiveness in our economy. In this direction, a special attention should be paid to checking costs and productivity growth in the economy, by raising investments in education, and by attracting most advanced technologies in production. Also, in the medium run, the macroeconomic policies should be  2  BIS Review 94/2009  prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. The fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. Budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. Though remaining within the projected level for 2009, the budget deficit by about ALL 30 billion constitutes a much higher amount than in the same period of the previous year. Under these conditions, the Bank of Albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. Preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. The demand for monetary assets increased during the last months.