"Family consumption and investments boosted the economy" - Themeli: Positive developments, but risks from the external environment remain high
In the second quarter, the Albanian economy continued to grow, but at a slower pace than last year and than the Bank of Albania's forecasts. According to the Director of Monetary Policy at the Bank of Albania, Erald Themeli, it was supported by the expansion of household consumption and investments.
The economy will continue to grow in the coming quarters, in the range of 3.5% to 4%.
"Economic growth at 3.4% was more than sufficient to generate employment and wage growth for the Albanian economy. Also, the slowdown in economic growth is a healthy phenomenon, because it enables a better balance of aggregate demand and supply in the economy for the coming period. Economic growth has been supported by the expansion of household consumption and private sector investments, but it has also been supported mainly by the increase in the export of services, but the peculiarity of the first quarter has also been the increase in the export of goods. Economic activity has also been supported by abundant credit", emphasized Themeli.
The Bank of Albania's decision not to change the base interest rate came to see the impact that the reduction in the base rate to 2.5% that took place in July will have on the markets.
"The decision to keep the interest rate unchanged is motivated by the fact that in our judgment, the current level of interest rates, the amount of liquidity in the market, the pace of credit expansion, but to a considerable extent also the exchange rate level, are appropriate for meeting our inflation target. This decision comes after a reduction in the base interest rate that the Bank of Albania made at the beginning of July. Given the short time that has passed since this decision, we judged that we should give more time to its full transmission to the financial markets to see the impact it will have on these markets and further on economic activity ," he said.
The Director of Monetary Policy stated that although the outlook for future economic developments is positive, it is also true that risks, mainly from the external environment, remain significant.
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