In this regard, the Bank of Albania considers remittances as an important source of income in the economy and a contributor to the Balance of Payments. From a narrower perspective, remittances are estimated to have a significant impact on Albanian households, for reducing the poverty and improving the quality of life. Even in the case of Albania, the studies performed by the Bank of Albania and the World Bank show that the income from remittances are allocated mainly for consumption, medication, and education, as well as for savings and investments, the latter mainly for residential properties. In addition to the above, the Bank of Albania treats remittances also from the perspective of their inflow channels in the Albanian economy. Recent studies show that the formal transfer channels dominate, mainly through money transfer financial institutions, and less through banks. In the meantime, remittances in cash remain at high levels, which is worth for an in-depth analysis. The World Bank survey conducted in 2016 concluded that the reasons for the limited use of the banking channels are the high costs on money transfers and the perceived cumbersome and complex procedures. To illustrate my point, according to this survey, the costs of remittances toward Albania are estimated at 9.4 per cent of the amount sent, compared to the 7.2 per cent average in the region. We are all aware that the more financial channels are used, the more finances penetrate in the economy.
The latter should aim at broadening the potential growth rate of Albania and underpinning its macroeconomic sustainability. In what follows I will elaborate on these issues, beginning first with a brief overview of the recent developments in global economy. The recovery of global economic activity persisted in the second quarter of 2010, while indirect or preliminary data show more moderate growth rates in the third quarter. Economic outlook remains highly uncertain due to the fiscal stimulus withdrawal and the private sector’s (unsatisfactory) soundness. Growth in advanced economies and in our main trading partners was moderate due to the correction of private sector’s balance sheets, weak lending and labour market, and low consumer confidence. The low capacity utilization rate has yielded weak inflationary pressures at a global level. The financial markets continue to show high levels of volatility in response to the concerns over the economic outlook and the long-term sustainability of fiscal indicators. In political terms, maintaining macroeconomic co-ordination at a global level and keeping open channels of the movement of goods, capital and technology, are considered priority measures to avoid a second recession. This would certainly provide substantial contribution to the Albanian economy, which remains a net borrower in the global market and that has benefited largely from the growth of demand and global trade in the form of higher exports in 2010. In light of these developments, and being largely affected by them, the Albanian economy has grown progressively over the year.