gent sejko : economic and financial developments in albania during 2017 and objectives for 2018 address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting organised by the albanian association of banks, tirana, 21 december 2017. * * * honourable aab chairman, dear banking system executives, dear friends and colleagues, as always, it a pleasure for me to be together with banking system executives in albania, in this annual end - of - year event organized under the auspices of the albanian association of banks. in my address, i would like to briefly focus on highlights that have characterised the economic and financial developments in albania over 2017, as well as on some of our objectives for 2018. albanian economy the albanian economy seems to be experiencing an overall positive moment of recovery, from both the global and the regional perspective. economic activity continued to grow reflecting the favourable financial environment, improvement of confidence, impulses generated by employment gains and the high levels of foreign direct investments, as well as the positive momentum in the economies of our trading partners. in terms of aggregate demand, growth was driven by the expansion of private consumption and investments, and the improvement of the balance of trade with abroad, especially in the third quarter. in response to the improvement by around 10. 5 % of the trade deficit in goods and services, the current account deficit fell to 4. 6 % of the gdp in the third quarter, one of the lowest levels in the last decade. on the other hand, the fiscal stimulus is estimated to have trended downward in the third and fourth quarters, albeit budget revenues and expenditure have continued to record high growth rates. the constant expansion of the aggregate demand has led to an increasingly higher utilisation of production capacities. the unemployment rate fell to 13. 6 % in the third quarter, down by 1. 1 percentage points from the same quarter in the previous year. however, the gradual convergence of the economy toward its equilibrium is yet to be accompanied by upward inflationary pressures, sufficient enough for the return of inflation to target. our accommodative monetary policy stance has reduced the costs of financing for the private sector, has boosted crediting in the domestic currency and has contributed to the improvement of the borrowers ’ financial situation. in the last months, financial markets have performed relatively calm, amid low interest rates, controlled risk premia and the exchange rate set on a stabilisation trend. banking system year 2017 was positive in terms

the incentives for sound fiscal and economic policy even further, thus achieving the opposite of stabilising monetary union. ultimately, this approach would also not be credible to financial markets as its inconsistencies raise doubts about the public and political support. bis central bankers ’ speeches 5. conclusion let me conclude my speech on germany ’ s role in the global economy with some caveats. in spite of the rather favourable performance during the crisis, germany faces major challenges, overcoming the euro area ’ s sovereign debt crisis being the most pressing. in addition, the level of public debt has risen substantially throughout the crisis. consequently, and considering the increasing fiscal burdens caused by an ageing society and a shrinking working - age population, consolidation is a major task for germany, too. it is indispensable to ensure the long - term sustainability of its public finances. but unlike some other emu member states, germany is still in a relatively favourable position. this combined with the fact that germany continues to be an important economic player despite global shifts in economic weights is due, not least, to painful but ultimately rather successful structural reforms undertaken in the past. it would be short - sighted to rely solely on these achievements. but they could well serve as an encouragement to reformminded policymakers in other countries. and the fact that these reforms, including the emphasis on fiscal soundness, contributed to revitalising the german economy and to increasing its resilience should not be a cause for concern or complaint. instead, it should be seen as good news – for germany, but also for emu and the global economy. bis central bankers ’ speeches