the main drivers of this sector, whereas most of other branches of the services sector contracted, year on year. likewise, the industry sector shrank by 8. 5 % in the second quarter, after its positive performance in the last six quarters. industry sector deceleration during this quarter was largely influenced by slashed output in “ energy, water and gas ”, whereas extraction and processing industry continued their upward value - added. after its surge in the first quarter of 2011, the construction sector contracted again in the second quarter, posting annualised downgrade of 1. 7 %. as regards aggregate demand, during the first half of the year, economic growth was supported mainly by the public sector and foreign demand contributions, whereas internal demand was lacklustre. available data suggest that private consumption and investments were sluggish during the first half of the year, thus conditioning the below - potential growth of the economy during this period. private consumption continues to reflect consumers ’ reluctance to spend and their inclination to save. domestic consumption has not totally reflected higher available income generated by higher wages and employment rates, or expansion of funding resources, in the form of consumer loan growth during 2011. in particular, remittances shortfall during the first nine months of the year may have lessened consumption for a part of albanian households. in addition, relatively high import prices, which burdened albanian households ’ budget in the first half of the year, may have impacted consumption negatively. against this performance of consumption during the first half, improved balances for large purchases – as suggested by the consumer confidence survey – and more consumer loans granted during the second half, suggest for higher consumption in the third and fourth quarters of 2011. subdued consumer spending and presence of spare capacities in the economy dampened businesses ’ demand for new investments. in parallel, higher lending prudence by banks may have discouraged, in part, the demand for investment loans. foreign direct investments were down during the first quarter of the year. higher capital expenditures in the last quarter are expected to generate higher contribution of this bis central bankers ’ speeches component to aggregate demand at year - end. in the mean time, improved lending terms in 2012 are expected to be translated into higher support for the system with investment loans and higher contribution to economic growth by this component of aggregate demand. fiscal policy was stimulating in 2011, materialised in positive contribution of public spending to aggregate demand. public spending and budget deficit growth rates moderated after the first quarter, settled at low levels in the second

emphasise that, notwithstanding the focus on the future challenges, the report shows optimism for the region. it notes that, unlike the other emerging economies, the presentation of productive industries will contribute to the increase of employment. also, the regional integration in industry has the capacity to generate growth of productivity, to better compete with the imports and contribute to the growth of regional exports. the institutional adoption and convergence is considerably important for the integration of albanian firms in the global output chain, and for strengthening their sophistication and specialisation in the global market. another potential for the transition to an innovation - based economy is “ the green economy ”, where the convergence capacity of the existing producing processes in other processes releasing less carbon may be considered as an opportunity for the further development of our region. regarding the future, the report assesses positively the reforms undertaken by the albanian authorities. the macroeconomic environment is assessed as stable and prospects show the positive growth pace will be maintained. trade, construction, transport and industry, as well as the narrowing of the deficit in the external sector of economy contributed most to the economic growth in 2017. at the same time, the financial system activity continued to reflect considerable improvement and showed good resilience to operational risks. the indicators of financial result, capitalisation and liquidity evidence the considerable improvement of credit quality and show the importance to continue the implementation of the measures undertaken by the bank of albania. 2 / 3 bis central bankers'speeches also, the report evidences that the projects and investments in infrastructure have contributed to economic integration of albania with regional countries, providing a positive effect on higher productivity and more opportunities. we assess that tap investment will provide positive effects on the energy infrastructure and will contribute to higher productivity through lower costs and covering the needs for energy capacities, thus reducing one of the structural weaknesses of the albanian economy ( the reliable supply with energy ). concluding, i would like to highlight the suggestions found in the report that it is now the time for the financial sector to focus on firms, as the basis for employment, innovation, productivity and economic growth. thus, the development policies should focus on the firms and their future, as a source of convergence growth. the economic development policies and priorities, at micro and macro level, should focus on : the improvement of the institutional and financial infrastructure ; the development of the capital market ; the investments in infrastructure ; and, the regional integration. * * * dear participants, the ebrd transition report 2017 – 18 is an important