Knowing the situation, which economy will go through the economic challenges ahead will require Albanian leaders to have a clear sense of direction and steady but decisive hands on the tiller. The current environment still offers the opportunity to advance policies and reforms and build fiscal and financial scenarios for sustainable, robust, and inclusive growth. Albanian leaders need to take advantage of this moment.

1. Reforms, technology and leadership will help Albanians toward the next storms
Albanian real GDP is now back in the levels it was a decade ago, and its unemployment rate is at
an eleven-year low, with the program-era labor reform facilitating formalization and job creation.
Its business climate is more attractive to investors. For example, in the mid-2000s it used to take
almost more than a month (40 days) to start a business. Now (2018) it takes only five days.
Its economy has rebalanced to become more export-oriented, including a more oriented to
regional market of the tourism sector and energy generation, leading the external current
account to move from chronic deficits of around 11 percent of GDP to balanced.
It has made impressive progress in cutting the fiscal deficit and reducing borrowing costs,
especially in latest years.
But, when we see that picture of economy of Albania in the global European and regional
economic picture, we check that risks in the rest of the world are increasing and will likely
constitute the most significant source of instability for the Albanian economy. So, pursuing
reforms today might be difficult, but these reforms will help during next storm.
Let be true, the facts do not show yet the near recession, but downside risks have clearly risen in
the neighbors of Albania and main trade partners.
What are the challenges?
Rising trade barriers. Last move from Kosovo government about the trade barrier could subtract
almost 0.2-0.5 percent from Albania growth going forward, as supply chains get disrupted, and
the environment for investment becomes more uncertain. This situation, even look for Albania
as a good opportunity, it is fact that the trade partners is not easy to be substituted even in the
case of 100% tax on Serbian - Bosnian goods. In the case when the Albania has an increase trend
of trade account with Serbia, the difficulty willrise the possibilityfor cooperation between Serbia
– Montenegro – Northern Macedonia to be the next supply chain disrupted by this move.
Knowing the situation, which economy will go through the economic challenges ahead will
require Albanian leaders to have a clear sense of direction and steady but decisive hands on the
tiller. The current environment still offers the opportunity to advance policies and reforms and
build fiscal and financial scenarios for sustainable, robust, and inclusive growth. Albanian leaders
need to take advantage of this moment.
A slowdown in EU and especially the slowdown in main trade actors with Albania such as Italy,
Turkey, Greece could lower the export target of Albanian goods for 2019 and beyond. Although
the transition to lower, more sustainable growth is welcome, there is a risk that the deceleration
in Italy and Turkey could be fasterthan expected. Even ifnew stimulus in EU countries is effective,

2. it is being targeted at relatively less import-intensive activities, so the rest of the Balkan might
still feel a deceleration. Germany, has some difficulties in the auto sector and lower external
demand, which will weigh on growth in 2019, and for Italy, where sovereign and financial risks
are adding headwinds to growth. In general, growth forecast for 2019 in the Euro Area is 1.6
percent, a 0.3 percentage point reduction compared to the forecast in October.
Many of the challenges facing us today transcend national borders and require coordinated
responses.Some countries inthe Western Balkans havenot made sufficientprogress during 2018
in cutting deficits and placing their debts on a downward path. Risk reduction at the national
level is indeed necessary for carefully designed risk-sharing frameworks to be viable and
effective.
On this occasion the primary action is about boosting productive spending targeted at raising
potential growth. This would have positive spillovers on other neighboring economies. This action
will be a step forward to enhance risk-sharing, in both the public and private sectors, but still
should be measured with fully capable central fiscal capacity.
The second action for Albanians is the intensity of cross-border private sector risk-sharing
through the financial markets, or better said, a much deeper financial sector union. This means
advancing the Union of Albanian Financial Market, to facilitate more cross-border investment
diversification through traded financial instruments. It also means completing the Banks
cooperation’s.
Structural reforms are the very serious problem for economy to boost saving, investment and
productivity. All these basic elements of economy are essential to raise living standards while
helping the economy growth in qualitative way, reducing existing vulnerabilities and risk
externalities. Key steps include making the labor market work better, simplifying regulations, and
improving the efficiency of judicial processes. These reforms can be targeted in a way that shield
the poorest in society and reduce the inequality, which in the last years has been increased.
A timeline for the future technology. All countries are undergoing a period of fast technological
change which will reshape the way we live and work. These changes cannot be ignored, and it is
criticalthat Albanians should be prepared, starting from regulatory framework and infrastructure
that help consumers and economy to be cost profit and real competitive with other countries of
Western Balkans. Developing an education system, like supply chain system in the good
circulation that is geared for the needs of the future workforce.
Albanians are well placed to benefit from this technological revolution. It has long been an
outward-facing country and is successfully reorienting its economy towards technology and
innovation. The Albanians could engage the sources and capacities to build a service area where
to be a shelter for big tech companies.