the global crisis impact over the albanian economy will largely depend on its intensity and duration. the persistence and deepening of the global economy crisis signal that the albanian economy will go through a harder economic environment in 2009, which may call for the solution of many issues. the slowing remittances and the tightening of financing conditions are the channels exposing the albanian economy the most to shocks in the global economic environment. the expected impact of these factors would materialize in a slower economic growth in 2009. we note that the economic and financial programs of all economic agents need to reflect and consider this prospect. a slower economic growth does not necessarily translate into a crisis in albania, but rather as a temporary development propelled by external factors. hence, promoting policies need to be formulated based on this underlying premise. they should at no case be designed to the detriment of long - term macroeconomic stability, which represents one the most treasured assets the albanian economy has achieved during the transition years. the preservation of financial stability remains crucial for the long - term economic development and under constant consideration in the bank of albania decision - making process. in this context, confidence in the banking system and in its balance sheets would be the most rational behaviour of any individual, business or other agent in the albanian economy. global experience shows that the mutual interaction between the real economy and the banking system in terms of savings, use of payment infrastructure and expertise in the area of financial counselling and support with funds is a key feature of economies that have managed to progress and leave behind the transition countries ’ level. in conclusion, i would like to assure the public that the bank of albania remains committed to creating the proper premises which boost economic activity at home, without infringing the objective of price stability. in addition it will keep working on firming up financial stability in the country. the bank of albania decisions will be a direct contribution to smoothing out the negative effects deriving from the international crisis and they will help to ensure the further maintenance of economic and financial balances at home.

russia had hard times owing to the slump in raw material prices in the global market, while east european countries have been impacted by the tightening of funding conditions on a global level. in contrast to many emerging countries, the albanian economy has been sustained by domestic demand, while – although upward – foreign demand in the form of albanian exports has provided a proportionally lower impact over the economic growth. economic activity at home has been almost entirely sustained by domestic financial resources, while foreign financing in the form of credit lines or portfolio investment has been less considerable. operating within all the parameters of financial soundness, the albanian banking system has been dynamic and effective in channelling the savings towards the funding of corporate production or household consumption. this process has been also facilitated by the macroeconomic stability which enabled the fall of risk premiums in economy and helped to gradually extend the investment horizon. these features led the economic activity at home to record adequate growth in the first three quarters of 2008, a period which is covered by statistical data. with regard to the last quarter, indirect data on economic activity – mainly financial ones – suggest a slight slowdown of economic activity, however, remaining within the projections for 2008. manufacturing, where construction continues to share the main weight, provided the main contribution to the increase of turnover indicator in terms of volume. investment in major road infrastructure projects and the recovery of construction permits from the prolonged constraints triggered high growth rates in construction activity during this period. in addition, the sector of services continues to provide the primary contribution to economic growth at home. the positive developments in domestic production have been also evidenced by the increase of economic tendency indicator, derived from the business and consumer opinions, and by the increased number in employed persons. in annual terms, unemployment rate fell by 1. 5 percent to 12. 62 percent, being mainly triggered by the increase in the average number of employed persons in the private agricultural sector. notwithstanding the inflationary pressures of early 2008 – mainly triggered by supply - side shocks – cpi annual inflation was brought back within the bank of albania ’ s target during the second half of 2008. in the second half of the same year annual inflation rates stood close to the central bank ’ s target – 3. 0 and 2. 5 percent, respectively, in both quarters. the performance of the inflation rate in the second half mirrored the global effect of the fall in basic commodity prices ( mainly foodstuff and oil prices ) as well as a more favourable price conjuncture of goods and services in the