capacities, particularly in technology and other areas where we could discover and explore advantages compared to other economies. instead of looking at each other merely as competitors, we should approach the regional cooperation as a non - zero - sum game, where each country has to gain in partnership. summarizing, this process calls for risk adverse macro and development policies ; well coordinated policy mix ; stronger cross border co - operation, and concerted efforts – perhaps harmonized and motivated across the region – to deepen the quality of structural reforms. structural reforms targeted to improving the business environment will help foster new capital inflows and strong and sustainable growth. in this respect ( and in the light of the last crisis lessons ), countries can make better use of the eu fiscal surveillance process as explicit policy commitment devices. candidate and potential candidate countries on one side and the ec on the other have the opportunity to transform this surveillance process ( possibly enhancing it with an analytical input form imf ) into an efficient foreign anchor.

inflationary pressures in the medium run. lending to the private sector recorded an annual growth of 9. 0 % in march. its performance, particularly in the recent months, was determined by the low private sector demand for credit and the cautious bank lending behaviour. financial markets were liquid and stable. interbank market rates dropped significantly in april and the trading volume in this market increased. the pass - through of easing monetary policy signals persisted in the lek deposit market as well, as reflected by the lower interest rates. government security yields in the primary market remained at similar levels to the previous month. their increase in the first quarter of 2012 reflects the developments in supply and demand - side structural factors, hence signalling no added inflation premiums. interest rates on lek - denominated loans did not fully respond to the easing monetary policy signals due to the higher credit risk premiums in particular branches of the economy. new information supports our previous projection that the gdp growth will remain below its potential in the quarters ahead, owing to the moderate contribution of foreign demand, lack of fiscal stimulus and sluggish domestic demand. the two main components of the latter, consumption and private investment, remain slow. the incomplete utilisation of capacities, coupled with the slow rise in wages and unit labour costs, are expected to exert contained inflationary pressures in the period ahead. economic agents ’ inflation expectations are anchored close to the target. they, however, may be subject to the response to global developments in the short run. the gradually subsiding supply - side shocks in the period ahead, the termination of base effects ’ impact and the extended effect of the bank of albania ’ s stimulating policy are expected to be followed by an rising inflation trend, thereby approaching the bank of albania ’ s target in the medium run. the bank of albania has continuously eased the monetary policy in the recent months, aiming at meeting the inflation target in the medium run, and keeping the inflation expectations and risk premiums in the economy under control. this policy has aimed at responding to a situation where the main obstacle to the recovery of private sector demand and foreign direct investment relates to the uncertainty for the future and approach to risk, in the short and medium run. we consider that the provision of a cautious monetary stimulus, bis central bankers ’ speeches conditioned by the control of risk premiums and safeguard of financial stability, is major contribution the bank of albania can make to the stable and long - term economic growth in albania. * * * based on