Albania: A Country of Opportunities In The World Banks forecasts of - - PowerPoint PPT Presentation

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

Source: The World Bank

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

Moreover, Albania’s exports to the EU are estimated at 40% below potential, the highest in the SEE region

Source: The World Bank

Albania’s import potential Albania’s export potential

• Imports from the EU are estimated to be below

potential by 33 percent

• According to The World Bank, Albania’s exports to

the EU are estimated at 40% below potential, the highest in the region

2013 Potential +67% 4,107 2,464 2013 Potential +49% 7,690 5,152

Albania’s potential in global trade, mln USD

Albania is working closely with international organizations so as to enhance its long-term growth prospects

New World Bank programs

• The World Bank Board of Directors approved two

Development Policy Loans in May

• Amounts from the DPLs will be used to support

the budget; helping with arrears clearance, financial sector improvement and the consolidation of Public Finances

• From July, the World Bank will start an Energy

Sector project in Albania, which will target reduction of operating losses in the sector, repairs to the largest HPPs, and the adoption of a new market model for energy

New agreements with IMF

• In February Albania and the IMF agreed to a new

medium term program, focusing on fiscal consolidation and economic growth

• The IMF will provide Albania with 300 million

Euros of funding, which will be used to clear arrears

• Government of Albania has begun structural

reforms, monitored by IMF, to improve the efficiency of the economy and state spending

• Over the 3 years Albania will start decreasing

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 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

A

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

B

Promising Sectoral Opportunities

4 promising industries include manufacturing, energy, agriculture and tourism

C

Comprehensive Structural Reforms

Government is launching major reforms to better share growth with foreign investors

D

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

A Export-oriented Growth Energy Fashion Construction

994 588 206 +48% 2013 2011 2009 694 641 483 +9% 2013 2011 2009 362 413 130 2013 +29% 2011 2009

• The export of minerals, fuels,

electricity and other energy products has enjoyed an annual growth rate of 48% in the past 5 years

• The export of textile, clothing and

footwear has been growing steadily at 9% per year

• Albania has the cost advantage

in fashion manufacturing

• Construction has been a new

driver of export for Albania

• The export of construction

materials and metals has a rapid growth rate of 29% per year recently

Albania’s export by sector, mln USD, 2009-2013

Source: Foreign Trade According To The Products (1993-2013), Institute of Statistics of Albania

In terms of human capital, Albania has a young workforce that are well-educated and highly-motivated

B Competitive Human Capital

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

Compared with neighboring countries, Albania’s wage level is the most competitive

B Competitive Human Capital Average monthly wage in EUR, 2013

• The average monthly wage of Albanian workers is

as low as 310 euros

Monthly minimum wages in EUR, 2013

• According to the latest minimum wage law of

Albania, it is the second lowest in the region

191 186 179 174 164 157 148 Bulgaria 405 Macedonia Bosnia and Herz. Romania Montenegro Turkey Serbia Albania 486 436 422 395 340 333 310 Serbia Montenegro Turkey 895 Bosnia and Herz. Romania Macedonia Bulgaria Albania

Source: The World Bank; Ministry of Economic Development, Trade and Entrepreneurship

Albania’s vibrant mining and manufacturing sector has been growing at 10% annually

C Promising Sectoral Opportunities

4,284 4,227 3,754 3,015 2,888 2008 +10% 2011 2010 2009 2012

Industrial output

• Manufacturing has been a stable contributor to

Albania’s GDP growth

• Many enterprises have partnership with major

brands and retailers throughout Europe

10% 13% 15%

Food

31% 2008 2,888

Mining

11%

Utility supply Chemicals Machinery Textile and leather Furniture and printing

2012 4,284 12% 25% 1% 16% 10% 35% 9% 10% 1%

Contribution by sector

Source: GDP output by sector, Institute of Statistics of Albania

• The mining industry has traditionally been the

backbone of the Albanian economy, and it has enjoyed rapid growth in the past five years

Albania’s industrial output, mln USD, 2008-2012

Albania’s legal framework on FDI has been designed to create a favorable business climate for foreign investors

D Comprehensive Structural Reforms Full protection and equal treatment

• Full protection of foreign investment

– Foreign investment may not be expropriated or nationalized directly or indirectly, except in special cases, in the interest of the public us as defined by law – Foreign investors have the right to expatriate all funds and contributions in kind of their investment

• Equal and unbiased treatment

– In all cases and at all times investments will 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

No limitation and full openness

• The implementation of the economic reforms

constitutes the main engagement of the Government for the country’s social-economic development, with the final goal of integration with the European Union – No prior government authorization is needed and no sector restrictions to foreign investments – There is no limitation on the percentage share of foreign participation in companies- 100% foreign ownership is possible

Source: Albanian Investment Development Agency

Furthermore, Albania has no restriction on capital movement and has one of the most competitive tax rates in the region

D Comprehensive Structural Reforms

Source: Albanian Investment Development Agency

No restriction on capital movement

1

No restrictions on repatriation of profits

2

Simplified tax procedures

3

Competitive tax rate

4