for further increase of the monetary stimulus to the economy during the first quarter of the year. the bank of albania has lowered the key interest rate twice, bringing it down to the historic low of 4. 25 %. such a decision, besides being in line with maintaining price stability over the medium term, provides the appropriate conditions for boosting private demand at home. according to recent data from instat, the albanian economy accelerated the growth rate in the fourth quarter of the previous year, posting 3. 8 % annual growth. the economic activity upturn was driven mainly by output increase in the services sector. value added of this sector surged 7. 5 % in annual terms, with a higher contribution by the branch of trade, transport and other services. similarly, the construction and agriculture sectors posted bis central bankers ’ speeches positive but low annual growth rates, 1. 2 % and 1. 9 %, respectively. positive contribution to economic growth was also provided by the branches of extractive industry and the processing industry, but they did not manage to balance the significant contraction in the branch of “ electrical energy, water and gas ”, which has resulted in negative contribution by the industry sector to the domestic product growth. from the perspective of aggregate demand components, economic growth in albania continued to be driven by foreign demand also in the last quarter of the past year. notwithstanding unfavourable developments in the global economy, net exports in real terms have shown higher growth rates in this period. in addition to foreign demand, the public sector demand provided a high contribution, in the fourth quarter of the past year, in the form of increased capital expenditure. in turn, private consumption and investments, while showing signals of recovery, were assessed as slow during the fourth quarter of 2011. statistics on the real economy for the first quarter of 2012 are only partially available. indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the albanian economy. macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. the contained

ardian fullani : recent economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision of the bank of albania supervisory council, tirana, 25 april 2012. * * * in its meeting of 25 april 2012, the supervisory council of the bank of albania reviewed and approved the quarterly monetary policy report. based on the analysis of albania ’ s latest economic and monetary developments and following discussions on their performance outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged at 4. 25 %. this decision reflects the balance of inflationary pressures and the need to maintain the macroeconomic stimulus to the economy, under the conditions of a more prudent fiscal policy during the in the course of the year. ( let me now proceed with an overview of economic developments and main issues discussed at today ’ s meeting. ) during the first quarter of 2012, the albanian economy continued to maintain the parameters of macroeconomic stability even in the context of the ongoing global crisis. international financial markets are characterised by high risk premiums and, despite measures taken to solve the public debt crisis in the euro area, signals for a normal progress of in the short run are absent. these developments, as expected, have provided a reining impact on our economy, which is mainly expressed in the continuation of below - potential economic growth. annual inflation slowed down significantly in the first quarter of the year. on average, it was 1. 1 % in this period, dropping 1. 8 percentage points from the previous quarter. the rapid decline of annual inflation rates, which has started in the third quarter of the past year, is driven mainly by the slowdown of price rise in food items during this period, as well as the stability of prices of other consumer goods. inflation performance has reflected the simultaneous action of supply and demand factors. on the supply side, slowdown of commodity prices in international markets and of inflation in our trade partners, combined with the stable exchange rate, have transmitted lower imported inflation rates to our economy. likewise, contribution of administered prices has been lower. inflation expectations have been anchored and production cost pressures contained. on the demand side, pressures remain low, conditioned by the continuation of the negative output gap. reduction of factual inflation rates, shifting of the inflationary pressures balance to the down side and the increase of aggregate demand below its potential, under the conditions of a controlled fiscal policy, have created the space