Albania: A Country of Opportunities
In The World Bank’s forecasts of long -term convergence, Albania will reach EU average living standards in 22 years Income convergence in Europe The convergence • With economic growth of 6 percent per year, it would take ten years for Albania to catch up with EU11 countries and over 22 years to reach EU average living standards • Expanding the growth potential through structural reforms in a stable macroeconomic environment drives strong income convergence Source: The World Bank
Moreover, Albania’s exports to the EU are estimated at 40% below potential, the highest in the SEE region Albania’s potential in global trade, mln USD Albania’s export potential Albania’s import potential +49% 7,690 +67% 4,107 5,152 2,464 2013 Potential 2013 Potential • According to The World Bank, Albania’s exports to • Imports from the EU are estimated to be below the EU are estimated at 40% below potential, the potential by 33 percent highest in the region Source: The World Bank
Albania is working closely with international organizations so as to enhance its long-term growth prospects New agreements with IMF New World Bank programs • In February Albania and the IMF agreed to a new • The World Bank Board of Directors approved two medium term program , focusing on fiscal Development Policy Loans in May consolidation and economic growth • Amounts from the DPLs will be used to support • The IMF will provide Albania with 300 million the budget; helping with arrears clearance, Euros of funding , which will be used to clear financial sector improvement and the arrears consolidation of Public Finances • Government of Albania has begun structural • From July, the World Bank will start an Energy reforms, monitored by IMF, to improve the Sector project in Albania, which will target efficiency of the economy and state spending reduction of operating losses in the sector, repairs to the largest HPPs, and the adoption of a new • Over the 3 years Albania will start decreasing market model for energy public debt to 65% of GDP in 2017, down from 73% at present • The latest review of the IMF (in May) found that the program is on track, while Albania’s fiscal income is doing better than projected Source: Ministry of Economic Development, Trade and Entrepreneurship
Four reasons to invest in Albania: healthy growth, young workforce, vibrant industries and comprehensive reforms A Export-oriented Growth Albania’s export has a 24% annual growth rate for the past five years and its trade with many EU countries has been surging B Competitive Human Capital 57 % of Albania’s population is under age of 35 and the average wage is one of the most competitive in the region C Promising Sectoral Opportunities 4 promising industries include manufacturing, energy, agriculture and tourism D Comprehensive Structural Reforms Government is launching major reforms to better share growth with foreign investors
A. Export-oriented Growth The Portal where information on Albania’s information regarding trade with partner countries can be obtained Atlas on Economic Complexity - Harvard Kennedy School, 2012 http://www.hks.harvard.edu/var/ezp_site/storage/fckeditor/file/pdfs/centers-programs/centers/cid/growth/atlas/ATLAS_2013_Part1.pdf
A Export-oriented Growth Exports of Albania are primarily driven by three sectors: energy, fashion and construction Albania’s export by sector, mln USD, 2009-2013 Energy Fashion Construction 994 +9% +48% +29% 694 641 588 483 413 362 206 130 2009 2011 2013 2009 2011 2013 2009 2011 2013 • The export of minerals, fuels, • Construction has been a new • The export of textile, clothing and electricity and other energy footwear has been growing driver of export for Albania products has enjoyed an steadily at 9% per year • The export of construction annual growth rate of 48% in materials and metals has a • Albania has the cost advantage the past 5 years in fashion manufacturing rapid growth rate of 29% per year recently Source: Foreign Trade According To The Products (1993-2013), Institute of Statistics of Albania
B Competitive Human Capital In terms of human capital, Albania has a young workforce that are well-educated and highly-motivated 57% of Albania’s population is under age of 35 The median age of Albania’s population is 31.2 years They are well-educated , highly-motivated Many can speak English, Italian and Greek There are over 1,000,000 of them Source: Ministry of Economic Development, Trade and Entrepreneurship
B Competitive Human Capital Compared with neighboring countries, Albania’s wage level is the most competitive Monthly minimum wages in EUR, 2013 Average monthly wage in EUR, 2013 148 310 Montenegro Albania Albania 157 Bulgaria 333 Bosnia and Herz. 164 Macedonia 340 Bulgaria 174 Romania 395 Macedonia 179 Bosnia and Herz. 422 Serbia 186 Serbia 436 191 486 Romania Montenegro Turkey 405 Turkey 895 • According to the latest minimum wage law of • The average monthly wage of Albanian workers is Albania, it is the second lowest in the region as low as 310 euros Source: The World Bank; Ministry of Economic Development, Trade and Entrepreneurship
C Promising Sectoral Opportunities Albania’s vibrant mining and manufacturing sector has been growing at 10% annually Albania’s industrial output, mln USD, 2008-2012 Industrial output Contribution by sector 4,284 25% +10% 4,284 4,227 2,888 3,754 Mining 13% 15% Food 3,015 10% 2,888 16% Textile and leather 12% 10% Furniture and printing 10% Chemicals 31% 35% Machinery 1% 1% Utility supply 9% 11% 2008 2009 2010 2011 2012 2008 2012 • Manufacturing has been a stable contributor to • The mining industry has traditionally been the Albania’s GDP growth backbone of the Albanian economy, and it has enjoyed rapid growth in the past five years • Many enterprises have partnership with major brands and retailers throughout Europe Source: GDP output by sector, Institute of Statistics of Albania
D Comprehensive Structural Reforms Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors No limitation and full openness Full protection and equal treatment • The implementation of the economic reforms • Full protection of foreign investment constitutes the main engagement of the – Foreign investment may not be Government for the country’s social -economic expropriated or nationalized directly or development, with the final goal of integration indirectly, except in special cases, in the with the European Union interest of the public us as defined by law – No prior government authorization is – Foreign investors have the right to expatriate needed and no sector restrictions to foreign all funds and contributions in kind of their investments investment – There is no limitation on the percentage • Equal and unbiased treatment share of foreign participation in companies- – In all cases and at all times investments will 100% foreign ownership is possible have an equal and unbiased treatment , and will have complete protection – In any case foreign investment will have a treatment equal to what common international practice allows Source: Albanian Investment Development Agency
D Comprehensive Structural Reforms Furthermore, Albania has no restriction on capital movement and has one of the most competitive tax rates in the region 1 No restriction on capital movement 2 No restrictions on repatriation of profits 3 Simplified tax procedures 4 Competitive tax rate Source: Albanian Investment Development Agency
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