Albania at financial risk

The prestigious “Financial Times” notes that the Albanian economy has a weak position and is greatly endangered by the Eurozone crisis.

Albania’s weakness derives by its strong dependence from foreign finances. The World Bank report says that the Albanian economy need for foreign funds will mount up to 21.3% of GDP during 2012, being the third most dependent country among under development economies, after Liban and Nicaragua.

Albania’s economy is not based on production, which dictates a high deficit in the export-import balance, gaps that should be financed through fluxes from outside the capital.

 Besides the high deficit, the economy is now starting to feel the burden of the debts that have been collected along the years. According to the World Bank, the foreign debt payment for 2012 mounts up to 9.6% of the GDP, for private and public loans.

In these conditions, Albania is obliged to find capitals from abroad, but the roads through which the economy could absorb them are fewer. Two most important are the foreign investments and the contracted loans of the government and private businesses.  

The World Bank also notes that the capital fluxes in underdevelopment economies, including Albania, marked a drastic decrease in 2012 and are expected to get even lower along the year.

The Bank warns that if the global credit freezes, the private companies in countries like Albania, Chile and Egypt, which have high amounts of short-termed debts, could be obliged to interrupt their activity.

The Bank says that the world crisis has entered a deep phase, and the effects upon underdevelopment economies will be even stronger then in 2008-2009, since the governments of developed countries have no more resources for intervening.

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