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Ekonomia

World Bank report, unemployment rises by 11.9 percent, tax breaks will increase deficit

World Bank report, unemployment rises by 11.9 percent, tax breaks will increase

Albania will have an increase in unemployment for 2021. Thus show the latest results published by the World Bank for Albania, as one of the countries most affected by the crisis caused by the pandemic. According to the WB, our country will find it difficult to recover next year because businesses will be in crisis and jobs will be cut and on the other hand we will have a very low level of consumption and exports, which are the basic foundations for economic recovery. "Albania will not feel the real recovery during 2021, as there will be slight economic growth and 5% decline. This is because one of the main indicators such as unemployment increased sharply, when economically developing countries had a high level of 11.5% in 2019 and this level of unemployed increased rapidly by 11, 9% in just 3 months of 2020 and is expected to increase if the pandemic situation still persists. In these conditions, Albania has had a significant decline in consumption by 8%, due to low income and lack of sufficient social support. Exports of goods and services will also shrink by 37%. "Both of these indicators have significantly increased the unemployment rate, when in these figures are not counted the informal workers, who are going through the most difficult period and are plunged into poverty," the report said. On the other hand another weak point of our country to cope with this crisis is the lack of fiscal reform. According to the WB, the tax relief for businesses is a supportive step for them, but on the other hand has increased to high levels to 12% the budget deficit. The government therefore needs to think about short-term reforms to improve the fiscal system. "Until now, Albania's macroeconomic policies have been aimed at supporting businesses and people vulnerable to the pandemic. But then he has to make reforms to recover the economy as a whole. In our forecasts, the current fiscal position of Albania is expected to greatly increase the budget deficit, with an increase of 12%, which will increase the debt to 81.4% ", writes WB. Under this baseline recovery scenario, the economy would still be 10.7 percent smaller than in the World Bank projection before COVID-19 for 2021. But then he has to make reforms to recover the economy as a whole. In our forecasts, the current fiscal position of Albania is expected to greatly increase the budget deficit, with an increase of 12%, which will increase the debt to 81.4% ", writes WB. Under this baseline recovery scenario, the economy would still be 10.7 percent smaller than in the World Bank projection before COVID-19 for 2021. But then he has to make reforms to recover the economy as a whole. In our forecasts, the current fiscal position of Albania is expected to greatly increase the budget deficit, with an increase of 12%, which will increase the debt to 81.4% ", writes WB. Under this baseline recovery scenario, the economy would still be 10.7 percent smaller than in the World Bank projection before COVID-19 for 2021.

Need recovery in 2022-2025

According to the Bank, Albania will feel a slight recovery at the end of 2021, with a slight increase of 5%. Of course, according to the WB, this will be possible only if the Albanian government will increase transparency and absorb as much foreign investment in the medium-term project 2022-2025. "Albania will be able to have an economic recovery in a three-year period with almost 26%, where 5% will be in 2021. Assuming control of the pandemic by the end of 2020, while it must work that exports, consumption and investments to be partially recovered. Further earthquake reconstruction should also boost growth, in line with the experience from similar disasters in emerging economies. In the coming years, private consumption will play an increasingly important role. "Private and public investment will also contribute to growth if the government continues to implement reforms to improve the business environment and invest in infrastructure." Even for the budget deficit, the WB predicts to go towards normalization in 2020 as the market will also improve and on the other hand if the pandemic is eased, exports to large markets will increase significantly. "At the sectoral level, services, led by tourism and construction, are expected to be the main drivers of growth. The current account deficit is expected to decrease to 10.5 percent of GDP in 2022 and further decrease to 8 percent in line with pre-crisis trends, driven by the projected improvements in the trade balance. Exports of services, including tourism and business expansion should narrow the trade deficit over the medium term. "Import growth will be high at 12.8 percent in 2022, as investments in infrastructure accelerate."

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