The improvement reflects the expansion of domestic demand - that is increase in consumption and private investments - whereas foreign demand appears weak and fiscal policy continues the consolidating trend. The new information obtained in the first half of the year is in line with this judgement. The intensity of supply shocks, which led to the rapid decline in inflation over the first half of the year, seems to decrease. Inflation recorded a slight increase in May, reaching at 0.7%. This performance confirms our judgement about the transitory nature of the abovementioned shocks. However, our analyses confirm that the balance of inflationary pressures is still weak. Economic activity remains below potential, suggesting that the return of inflation to target will be a gradual and medium-term phenomenon. Our monetary policy has assumed a stronger stimulating stance over 2016. After two consecutive cuts in April and May, the key interest rate currently stands at 1.25%. The strengthening of the monetary stimulus has led to lowering the interest rates across all segments of the financial market, thus stimulating the increase in consumption and private investments. The Bank of Albania deems that the financial setting - characterised by low interest rates and ample liquidity - should encourage banks for a more positive approach towards lending. Banking sector’s soundness indicators have been improving, in response to economic activity recovery and other measures undertaken by Albanian authorities. Liquidity and capitalisation indicators maintain good parameters, whereas the stock of nonperforming loans - albeit fluctuating - has been put under control.

Ardian Fullani: Albania – optimistic, flexible and adaptive to challenges Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Opening of “Klik Ekspo Group” Fair, Tirana, 25 November 2008. *  *  *  Honourable Prime Minister, Honourable Ministers, Honourable Ambassadors, Dear Mr. Uldedaj! Dear entrepreneurs! Dear ladies and gentlemen! I feel privileged to be here with you tonight and at the same time, be a friend to the Albanian entrepreneurship. The times we are living through require the special attention of economic and financial forums, in particular when the latter bring together the governmental bodies, the banking system and the private entrepreneurship. The global table of discussions on macro-finance and future policies is the present focus; hence, I consider this forum as a follow-up of this prevailing philosophy of the time we are living in. Set in a comprehensive context, the economic developments in the recent months have been characterized by the vague situation the monetary and financial markets and institutions have been going through – which in the last couple of weeks has been followed by other developments. The most recent data show that the economies of developed countries – the USA, Euro area, England and Japan – have recorded decline in economic growth. However, most emerging economies have shown higher immunity to the consequences of the global crisis. Economic activity has been buttressed by domestic factors, which is the main reason to justify the immunity in addition to the incomplete financial integration with the developed countries.