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Upcoming elections will be 'real test' of #Albania EU credentials says report

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A major new report has heralded economic growth in Albania but warned that the “real test” will come in the country’s upcoming national elections, writes Martin Banks.

The report, by BMI Research, says the Albanian economy is “among the fastest growing” in the region.

This is in line with a separate analysis by Albania's official Institute of Statistics (INSTAT) which has released figures showing GDP growth for 2016 of 3.46%.

But the report by BMI, a research firm that is part of the Fitch Group and which provides macroeconomic, industry and financial market analysis, is qualified by highlighting what it says are the “risks” generated were the ruling Socialist Party to be defeated in the June 18 elections.

While EU accession criteria will remain an important policy anchor, the “risks of regression are arguably larger if the opposition wins power”.

This includes the possibility of higher inflation and “risks” to private consumption.

It states Albania, which enjoys EU accession membership status, has made “progress”  at addressing political challenges over the last two years  but the “real test” will come when the nation go to the polls.

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“We believe,” it says, “the ruling Socialist coalition will hold on to power, implying a high degree of policy continuity.”

BMI Research, which covers 24 industries and 200 global markets, cautions that Albania’s external sector is “exposed” to two of Europe’s weakest economies (Greece and Italy) but that domestic demand will remain “robust”.

Infrastructure spending, in particular, will keep the Albania economy among the fastest growing in the region in 2017 and 2018, it goes on to predict.

The INSTAT report said the growth in 2016 was led by ommercial trade, tourism, construction and energy production and was fuelled in part by a fourth-quarter export surge of 16%.

Growth exceeded forecasts by both the International Monetary Fund and the World Bank.

Overall, the year's performance was the best since 2010 when growth was 3.7%, it says.

Welcoming the encouraging data, Albania’s Prime Minister Edi Rama said: "This is good news, but it's only the start of what we hope to achieve on the economy. My government's first term has focused primarily on institutional reform and improved governance. Now we are starting see the results -- in investment, business expansion and in job creation. Now we must pour all our efforts into economic expansion and generating rewarding jobs for our fellow citizens."

Finance Minister Arben Ahmetaj said the two reports confirmed an overall improvement in the Albanian fiscal situation, adding: "Stable government debt, as one of the most vital indicators of the macroeconomic health in the country, is now in a much more favourable position than it was a few years ago.”

Albania is officially a European Union "candidate country" and moves are underway to make Tirana ready for future membership. That means government reforms, more transparency, stamping out corruption and tackling widespread organised crime. Brussels is keen for the momentum to continue.

Last  November, the European Commission issued a positive recommendation for Albania to open accession negotiations with the EU, but this is conditional upon tangible progress in implementation of the justice reform, in particular, the vetting of judges and prosecutors.

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