Ardian Fullani: Recent economic developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Press Conference on Monetary Policy Decision of Supervisory Council of the Bank of Albania, Tirana, 29 July 2009. *  *  *  The Supervisory Council of the Bank of Albania, at its meeting of July 29, 2009, after getting acquainted with the latest economic-financial developments at home and abroad and analysing prudentially the confidence indicators, banking system expectations and forecasts made by Bank of Albania’s staff about eight coming quarters, decided to keep the base interest rate, i.e., the weekly repurchase agreement rate unchanged, at 5.75 percent. This decision of the Supervisory Council is based on the following arguments: The economic developments in the first half posed strong challenges to the Albania economy. The global crisis affected our economy, swinging the factors and balances that have sustained the economic growth, thus testing the immunity and self-adjusting mechanisms of the economy and raising certain complex questions to economic agents and macroeconomic policies. The economic recession hitting a major part of our trading partners is accompanied by the fall of trade exchanges and of foreign currency inflows. Rise of uncertainty in global financial markets has shaken the confidence in the financial system, exerting pressure on the tightening of financial conditions in Albania. Both these factors are reflected in reduced consumption, exports and investments, leading to economic activity slowdown and exerting pressure on fiscal indicators of budget revenues and budget deficit.
Thereupon these countries have been increasingly affected by the crisis. According to IMF, the emerging countries of Eastern Europe are estimated to incur a contraction of about 5 percent during this year. The Albanian economy, in the face of this unfavourable environment, has recorded a comparatively positive performance. There are few data on the real economy. The Bank of  BIS Review 94/2009  1  Albania estimates that a positive economic growth has characterised the first half of year. On the others hand, low growth of credit and money supply, deteriorated business and consumer confidence indicators, slow-down of budget revenues and specific indicators of certain economy sectors, suggest that the economic growth rate has decelerated. It is still early to draw conclusions on the economic performance over the course of 2009 and onward. The Bank of Albania deems that the premises to keep positive economic growth rates in the country are present, among which the macroeconomic and financial stability of the country is of primary importance. Economic activity at home is carried out under the presence of favourable consumer price stability. It is sustained by a soothing tendency of monetary conditions and by an expansionist fiscal policy over this period. The Bank of Albania cut the base interest rate in January and undertook liquidity-injecting operations, raising its quantity in the market.