negative impact of the covid - 19 pandemic. the measures taken to contain the pandemic coupled with the heightened uncertainties drove albanian economy to recession. they drove unemployment increases and posed financial difficulties to many enterprises and households. indicators of economic balances worsened : current deficit expanded ; budget revenues dropped ; public debt lifted up ; while 1 / 6 bis central bankers'speeches balances of banking and finical sector ’ s operators were put under pressure. in parallel with them, premises for the return of inflation to target faded out. figures published by instat for 2020 provide a more detailed view of the impact of this crisis on the albanian economy. thus, the volume of economic activity contracted by 3. 3 % and unemployment rate increased to 11. 8 %. the economic downturn reflected the simultaneous contraction in almost all components of aggregate demand and in all sectors of economy. the crisis has hit more particularly private consumption and trade flows, where the exports of both goods and services fell. on the other hand, consumption and public investments have been upwards, by partially compensating the decrease in the private demand. the increase of budged expenditures, in parallel with the fall of fiscal revenue drove to a growth of budget deficit and public debt. at the end of 2020, public debt to gdp reached 76. 1 %, from 66. 3 % at the end of 2019. in terms of time, the maximum negative impact of the crisis appeared in the second quarter, while the two next quarters recorded a gradual improvement of economic indicators, albeit remaining below the levels recorded in the previous year. in particular, output and employment remain at a low level compared with 2019, by reflecting the weak cyclical position of albania and suggesting that the aggregate demand remains at insufficient levels to generate complete employment of output factors. hence, the domestic inflationary pressures remain low, while fall of inflation in our trade partners has curbed the increase of imported inflation. thus, in 2019, annual inflation averaged 1. 6 %, remaining below our target. dear ladies and gentlemen, the covid - 19 pandemic is the most serious economic challenge we have been facing during the last two decades. in these circumstances, the intervention of public authorities with extraordinary simulating measures was indispensable, to mitigate the negative immediate effect of the crises and contain its long - term impact on economy. the bank of albania, within its jurisdiction, embarked on a comprehensive package of measures, which consisted in : the reduction of the

, increase of production capacities and adoption of more advanced processes and technologies should be priorities of the country ’ s development policies, in the macro - and micro economic aspects. public expenditures provided a positive contribution to the aggregate demand of 2011 h1. following the consolidated behaviour of last year, the fiscal policy was a stimulating one during this period. public spending increased by 7. 4 % in annual terms, led primarily by current expenditures, with an added positive contribution of capital expenditures as well. on the other hand, budget revenues were slow, increasing by 1. 1 % in annual terms. the differences of growth rates for revenues and public spending materialised in the expansion of the public deficit. in gdp terms, budget deficit at the end of 2011 h1 stands at 4. 1 % or about 1. 5 p. p. higher than a year earlier. expanded fiscal policy was more present during the first quarter of the year, while in the second quarter it was more moderate. revenue and spending growth rates reduced during the second quarter, leading to the need for the revision of the 2011 budget, in order to retain the parameters of public finance soundness in the short and long run. on the other hand, measures to control budget deficit through reducing public spending implies modelling the fiscal stimulus during the second half of 2011. foreign demand continued to provide a positive contribution to the aggregate demand. nevertheless, as expected, its positive impact was lower than a year earlier. during the first five months of the year, albanian exports increased by 23. 3 % y - o - y, which is lower compared with 2010. on the other hand, deterioration of trade terms and internal demand performance triggered the increase of imports in the first half of the year. value of imports increased 14. 1 % y - o - y during january – may, thus, leading to higher trade deficit. following its narrowing in 2010, this deficit expanded by approximately 8. 8 % y - o - y during this period. trade deficit expansion, negative foreign currency flows in the services account and lower remittances are reflected in the expansion of the current account deficit in the first quarter, at the end of which, this deficit was at 11. 8 % of the gdp, illustrating the fragile position of the external sector of the economy. the performance of the four demand components led to positive, but below potential, economic growth during 2011 h1. unutilised capacities in the economy controlled production costs and generated controlled inflation pressures. monetary indicator analysis