albanian economy in the global economic background altin tanku may 18 th 2012
TRANSCRIPT
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Albanian Economy in the Global Economic Background
Altin Tanku
May 18th 2012
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Overview
• Current Developments – Taking stock of current global developments
• Economy• Financial system
• Future in a Global World– Own Model of growth– The role of Partners
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Catching up at any speed
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2000
4000
6000
8000
10000
12000
14000
16000
18000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
5000
10000
15000
20000
25000
30000
35000
40000
Albania Bosnia and Herzegovina Bulgaria China Croatia
Hungary Kosovo Macedonia, FYR Montenegro Romania
Russian Federation Serbia Poland European Union
GDP per Capita
Source World Bank & UNCTAD
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Inflation
Foreign price developments the most likely determinant of inflation
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•Growth depends on consumption, investments and recently exports.•Investment depend on government exp. and credit to private sector.
GDP Growth
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GDP sectors
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Dynamic Economic Forecasts
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Policy & Market Interest Rates
Policy is constrained by the presence of output gap and low GDP and low inflation (no strong demand yet in horizon)
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Fiscal Developments
Fiscal stance is stretched as much as it can, there is less or no room for further fiscal expansion.
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Foreign Trade Developments
Export growth during 2010-2011 represent mainly exports of energy.
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Current Account
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The other “Export”EU Remittances Oflow
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80
2005 2006 2007 2008 2009
Germany Greece Italy Remitances in perspective
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10
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60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Remittances % of Exp. Remittances % of GDP
Source EUROSTAT & UNCTAD
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Foreign Direct Investments
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Exports
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Imports
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Free floating exchange rates
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Banking System
Dec-08 Dec-09 Dec-10 Dec-11No. of Banks 16 16 16 16
No. of banks branches 511 524 529 528Assets/GDP (%) 76.7 77.5 81.0 84.8Credit/GDP (%) 36.5 39.3 40.1 42.8
Share of foreign capital (%) 91.8 92.3 92.5 N/ACapital Adequacy Ratio (%) 17.2 16.2 15.4 15.6
ROA (%) 0.91 0.42 0.72 0.07ROE (%) 11.35 4.58 7.58 0.76
Net Interest Margin (%) 4.13 4.04 4.32 4.20Liquid Assets/Total assets (%) 42.8 26.6* 25.9* 26.5*
* Note: The methodology of calculating Liquid Assets has changed in December 2009
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Financial Intermediation
-5%
5%
15%
25%
35%
45%
55%
Jan
-08
Feb
-08
Mar
-08
Apr-
08
May
-08
Ju
n-0
8J
ul-
08
Au
g-0
8S
ep-0
8O
ct-0
8N
ov-0
8D
ec-0
8J
an-0
9F
eb-0
9M
ar-0
9A
pr-
09
May
-09
Ju
n-0
9J
ul-
09
Au
g-0
9S
ep-0
9O
ct-0
9N
ov-0
9D
ec-0
9J
an-1
0F
eb-1
0M
ar-1
0A
pr-
10
May
-10
Ju
n-1
0J
ul-
10
Au
g-1
0S
ep-1
0O
ct-1
0N
ov-1
0D
ec-1
0J
an-1
1F
eb-1
1M
ar-1
1A
pr-
11
May
-11
Ju
n-1
1J
ul-
11
Au
g-1
1S
ep-1
1O
ct-1
1N
ov-1
1D
ec-1
1
Deposit growth (y-o-y)
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Sources of Financial Intermediation
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Non Performing Loans
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Dec
-05
Mar
-06
Jun-
06
Sep
-06
Dec
-06
Mar
-07
Jun-
07
Sep
-07
Dec
-07
Mar
-08
Jun-
08
Sep
-08
Dec
-08
Mar
-09
Jun-
09
Sep
-09
Dec
-09
Mar
-10
Jun-
10
Sep
-10
Dec
-10
Mar
-11
Jun-
11
Sep
-11
Dec
-11
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Albania-EU-Global Economy• Albania model of growth
– Internal Market Factors • Factor redistribution
» early transition period • Absorption lead model
» period leading to the crisis
– Export lead strategies• Cheap labor?• Lots of FDI exclusively from EU?• “Close” partners in geography and other dimensions?• New relatively large markets?• Moving up the value chain?
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Global trends & Theory of International Trade
“Over the past three decades hundred of millions of workers have entered the global economy… and over time they have generally gained in terms of human capital and in terms of value added and income. … but these new workers have brought more employment competition and significant shifts in relative wages and prices, which is having profound distributional effects.”
Spence, M., 2011
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Albania-EU-Global Economy
• One global market, one global factor, one global price.
• Deal with it …but how …
• Challenge: remain part of the global market.– Reduce dependence on single traditional partners– Hope that the anchor is still there– Define relevance of the SEE term
• Must know for the future • Understand the nature and value of wealth• It is all part of an endogenous system• There is potential for regime change
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Global Economy & Albania– The wealthiest “nation” is the “leading anchor”
– What will define wealth in the next 50 years– Potential for growth
» minerals, agriculture, trade related services and infrastructure
– It is all part of an endogenous system– EU developments can not go unnoticed in the global economy.– Global developments can not be treated as exogenous and unrelated
with developments of Albania and/or its main partner.
– There is potential for regime change– Literature on the negative effects of globalization is growing in size and
topics. – Globalization or technological change or both have constrained driving
forces of the system opening gaps that might tiger error correcting mechanisms.
» Structural breaks vs. temporary drifting » Where is the error correcting mechanism located in the system.