The economic growth rate of Albania has been throughout this period higher than the one of other Southeastern European countries or even the one of the countries being recently members of the European Union. The activity conducted by the Albanian economy, as a relatively open economy, was fuelled by the invigoration on a world-wide scale of the economic activity throughout 2004. A slow but a safe growth of the European economy experienced over 2004 has been a positive factor for the Albanian economy, fostering the demand for our exports and sustaining the rise of remittances inflow in foreign currency from emigrants. The average inflation rate of the euro area has been around 2.4 percent over this year, without exerting any influence on the rise of the imported inflation rate in Albania. Simultaneously, the impact of shocks on the world economy during 2004 resulted to be smoother in the Albanian economy. Oil price rise in the international market was amortised partially due to Lek appreciation and partially due to the rising competitiveness and the emerging of a certain flexibility of demand for this product. The impact of oil price rise on the inflation rate in the country has been restricted. Also, its impact on the Albanian economy, though hard to be measured, is believed to have been rather a smooth one according to the estimations on the performance of the most exposed sectors to oil price, the transport and industry. Exchange rates have been fluctuating over 2004.
According to assessments made by the Bank of Albania, there exist some long-term factors whose operation has influenced on appreciating the Lek’s value: •  Constant consolidation of the country’s economic stability. •  Interest rate spread between the Lek and the foreign currencies. •  Consolidation of public finances and budget deficit, dictating a low government demand for monetary assets. •  Stable remittances by Albanian emigrants working abroad. In the meantime, during 2004 the exchange rate performance was also impacted by specific factors of the year. Specific factors relate to starting of tourism earlier than in the previous years, rise of agricultural produce and decline of demand for agricultural merchandise imports, impacting on the supply and demand for foreign currency in terms of the Lek appreciation. Also, the international foreign exchange market developments are reflected in our foreign exchange market. The euro appreciation versus the dollar over more than a year is reflected in the reduction of the dollar’s value even in our country, though no strengthening of the euro is observed. During 2004, the dollar was depreciated by 7.5 percent against the euro in the international market. During 2004, the Bank of Albania intervened in the foreign exchange market in terms of purchasing foreign currency, in an effort to prevent large exchange rate fluctuations reflected mainly during the summer and end-year period. Financial markets Growth of deposits in Lek, in the presence of a low government demand for monetary assets, created premises for increasing banks’ liquidity and extending interbank market activity.