The fiscal surplus has reflected the simultaneous decline of public income and expenditure, respectively 5.3% and 5.5%, year on year. As regards expenditures, capital expenditures decreased whereas current expenditures increased during this period. Foreign trade data point to about 8.7% annual contraction of Albanian exports, in January, while imports annual growth rates slowed down to 4.5%. These developments in the foreign trade were materialised in wider trade deficit, which expanded by about 13.8% from a year  BIS central bankers’ speeches  1  earlier. The performance of this indicator during the first two months of the year may be subject to temporary factors. Its dynamic and developments in the future will be monitored. Foreign demand has been the main driver of our aggregate demand over the last two years and, in Bank of Albania’s view, will continue to provide small positive impact in 2012. Monetary developments were in line with the performance of the real economy. Their analysis confirms the existence of low monetary inflationary pressures on the economy. Broad money, monetary aggregate M3, decelerated its annual growth to 8.1% in January. On the demand side, this performance has been affected by low demand for funds by the public and private sectors in January. Annual private sector credit pursued the downtrend that had started in the last quarter of 2011, settling at 9.9% in January. Its performance has reflected lower demand for credit by both businesses and households.
The past few weeks have seen some calming of global financial markets, but we are still a long way away from normalisation. With the worldwide deterioration in the economy, credit risks at banks will rise considerably. Attention was drawn to this in June 2008, in our last report on financial stability. Bank provisions for credit risks are currently at a historically low level, and they will need to be substantially increased. This will have a negative impact on their profitability. In the case of the big banks, the situation also involves considerable risks for trading portfolios. The worldwide economic downturn comes at a time when the international financial system is already in bad shape. In particular the big banks that have been hit especially hard by the crisis could be forced to curtail, or further curtail, their lending. This, in turn, could have additional negative effects on the real economy. In order to put a halt to this negative spiral, we consider it important that the economy be supported with monetary and fiscal measures. The interest rate reductions carried out by the Swiss National Bank (SNB) should be seen as part of these measures. ... but the resilience of the big banks has been increased Given this situation, the fact that it has been possible to increase the resilience of the Swiss big banks is crucial. Credit Suisse boosted its capital through private investors by a total of CHF 10 billion. It thereby strengthened its equity position substantially and increased its capacity for absorbing additional shocks.