Economy in the Balkans: What’s happening In Albania and North Macedonia?
Economy in the Balkans is in an interesting shape. The majority of the currencies and in industrialized nations are floating. Meaning that the values of their exchange rates are mostly determined by variables affecting the supply and demand for those currencies. The majority of those nations have monetary authorities. They adhere to specific anti-inflationary policies and use interest rates. The size of the domestic money supply. Or the level of monetary financing of public sector obligations to that goal.
Additionally, some nations must consider how their current accounts and balance of payments are developing. Whilst others must pay attention to the levels of incoming or departing capital inflows. However, some nations also make an effort to reduce their exchange rates. This in order to increase their position in the market.
The governor of Albania’s central bank, Gent Sejko, announced that the bank would maintain its policy rate at 2.75%. Despite evidence of falling inflation and strong economic development. According to a statement released by the central bank on Wednesday. The interest rates on the overnight lending facility and overnight deposit facility remained at 3.75% and 1.75%, respectively.
Although it still remains at high historical levels and shows obvious symptoms of the damage resulting from the external shock. Albania’s inflation somewhat decreased in the previous month. Largely as a result of lower oil and transportation costs. This according to the governor of the central bank. The central bank anticipates that inflation will turn in the fourth quarter of 2022. Then gradually decline in 2023 before rising to the desired level in the second half of 2024.
According to Sejko, “This projection is based on: the predicted lowered inflation in the global environment; the progressive decreasing second-round impacts in Albania; and on the preservation of the positive economic growth rates during the coming period.”
North Macedonia’s economy increased by 4.8% year over year
By creating a more balanced demand and supply ratio in Albania, economic growth is anticipated to stay moderate in the second half of the next year and gradually converge towards its historical rates in the following term.
According to the most recent information provided by the national statistical office, Albania’s annual harmonised index of consumer prices (HICP) grew by 8% in November after rising at the same rate in October. In the second quarter of 2022, the nation’s economy grew by 2.2%.
The central bank has increased its policy rate five times since the start of 2022: in March, July, August, October, and November. At the end of November, North Macedonia’s M1 money supply stood at 224 billion denars ($3.9 billion/3.6 billion euro), up 4.8% over the same period last year.
According to data released by the central bank on Wednesday, M1, which comprises cash in circulation and demand deposits, was 2% higher at the end of November compared to the value at the end of October.
