Monetary Policy Report Q3 - 2013

The Albanian economy saw slow economic growth and weak inflationary pressures throughout 2013. Economic growth slowed down to 1.1% in the second quarter, while available information suggests weak economic activity during the third quarter. The sluggish private demand offset the increasing positive impulses generated by the fiscal stimulus and external demand in the first half of the year. Consumption and private sector investments were weak, whereas external demand continued to curb due to the economic situation in Albania’s trading partners. Private agents’ uncertainty about the future was reflected in low tendency to spend and weak demand for loans, which in turn prevented the transmission of the monetary stimulus to the economy. Moreover, banking system’s conservative policies kept the lending standards tight, and prevented the normal functioning of the monetary policy transmission mechanism.