We are expecting employment to fall by around 300,000 persons from the peak in 2008 to a trough in 2011 and that unemployment will continue to rise to around 11 per cent (see Figures 15 and 16)  5  See the OECD’s Composite Leading Indicators, 7 August, 2009, http://www.oecd.org/dataoecd/45/9/43453886.pdf. 6  Economic Tendency Survey, July 2009, National Institute of Economic Research, 30 July 2009. 7  Institute for Supply Management (SILF) and Swedbank, 3 August 2009. 4  BIS Review 98/2009  After the recent monetary policy meeting new information was received from the Labour Force Surveys, which was roughly in line with our assessment. Employment fell by 1.7 per cent in June compared with the same month in the previous year and unemployment increased to 9.8 per cent. This was respectively two-tenths and one-tenth of a percentage point better than we had forecast. 8 Underlying inflation is in line with the inflation target of 2 per cent Inflation has fallen rapidly in recent months and is expected to become negative for a large part of the year. However, CPI inflation is strongly affected by interest rate changes and by changes in energy prices. It is therefore better to study the underlying inflation rate. Underlying inflation measured as the CPIF, where mortgage rates are held constant, is expected to be close to 2 per cent throughout the forecast period (see Figure 17). New inflation figures published after the most recent monetary policy meeting have also been roughly in line with our assessments.
Indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the Albanian economy. Macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. Moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. Fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. The contained fiscal approach has been reflected in minimum public expenditure in the first quarter of the year, with an annualised rate of 0.7%. Furthermore, low growth rates of fiscal revenues continued their trend, settling at 1.2% in this quarter. The budget deficit was ALL 11.5 billion, or about 2.5% down compared with the first quarter of a year earlier. Developments in foreign trade over the first two-month period of the year point to contracted trade exchange in annual terms. Value of exports in these two months dipped by 20.5% against the corresponding period of a year earlier, reflecting the moderation of foreign demand and price developments in global markets. On the imports side, their growth rates were significantly decelerated, reaching a nominal annual growth of 1.8% during this period.