INVESTING IN ALBANIA. Ellen Goldstein World Bank Country Director for Southeast Europe. Austrian Federal Economic Chamber Vienna May 12, 2014

Transcription

1 INVESTING IN ALBANIA Ellen Goldstein World Bank Country Director for Southeast Europe Austrian Federal Economic Chamber Vienna May 12, 2014

2 Key Messages Location, labor costs, endowments and reforms make investing in Albania a good opportunity! Boosting investment for growth and jobs will require a sustained reform effort over the medium-term. Macro-fiscal adjustment, improving the investment climate, increasing connectedness, building new economy skills are key Integration into the European economic bloc will drive a powerful convergence towards greater prosperity in Albania

3 Location: next to the world s largest and most connected economic bloc Note: Map resized according to economic strength

4 Labor costs: significantly lower than the rest of Europe but higher than fast-growing Asia

5 Natural Endowments: rich in hydropower and tourism potential #4 in top 50 places to go in 2014 Hydropower potential of about 4500 MW of which only 1700 MW (35%) installed.

6 Global connectedness: below Europe and fast-growing Asia but starting to catch up Global connectedness score, Albania Source: DHL Bosnia and Herzegovina FYR Macedonia Serbia EU11 EU15 Singapore

7 Kosovo BiH Albania Serbia Montenegro Macedonia, FYR Panama Malaysia Ireland Singapore Exports remain a small share of national income relative to Europe and fast-growing Asia 250 Exports of goods and services (% of GDP) 200 Exports destination Other Non- EU Balkan EU 50 0

8 but Albania is a world leader in exporting people 45% 40% Share of migrant stock in source region population % 30% 25% 20% 15% 10% 5% 0% Rest of the World Western Balkans Albania Source: Based on UN International Migrant Stocks (2013 revision)

9 Investing in Albania EXPLOITING OPPORTUNITIES, OVERCOMING CHALLENGES

10 Priority 1- Putting the macro-economic and fiscal house in order Large fiscal deficits and accumulation of arrears drove up public debt 10 Fiscal balance (excl. arrears), % GDP 75 Public debt, % GDP e Real growth, % Fiscal balance excluding arrears, % of GDP e Source: World Bank staff calculations Source: World Bank staff calculations

11 Debt to GDP ratio Serious fiscal reforms needed to stabilize public debt in the medium-term Combined tax and pension reforms Low growth no reform Source: World Bank staff calculations

12 Top 10: progress on macroeconomic and fiscal reforms Agreed medium-term macro-fiscal framework with IMF/WB Adopted public sector arrears clearance & prevention strategy Cleared arrears of Eur 174 million by end-april Set commitment controls to avoid re-accumulation of arrears Improved electricity billing for non-metered households Enhanced revenue mobilization through tax policy and administration Launched public consultations on 2014 revision of Pension Law Adopted risk-based banking supervision system Strengthened deposit insurance system Expedited resolution of non-performing loans in banking sector

13 Priority 2 Improve the Investment Climate and Global Connectedness Macedonia, FYR 25 Montenegro 44 Hungary 54 Regional Average (ECA) 71 Greece 72 Croatia 89 Albania 90 Bosnia and Herzegovina 131 Albania in the mediocre middle in global rankings of Doing Business

14 Mixed performance on 10 Doing Business areas Starting a Business (76th) Resolving Insolvency (62nd) Dealing with Construction Permits (189th) Enforcing Contracts (124th) Getting Electricity (158th) Trading Across Borders (85th) Registering Property (119th) Paying Taxes (146th) Getting Credit (13th) Protecting Investors (14th) Regional average (ECA) Albania

15 Priority 3 Improve energy sector performance Technical and non-technical losses are more than 40 percent of energy generated.

16 Priority 4 Strengthening worker skills for new economy jobs PISA scores in math test, 2012 Trend: Stagnating Trend: Stagnating Trend: Improving 400 Trend: Improving Trend: Stagnating Albania LAC Developing Asia Western Balkans ECA Source: PISA; Note: Developing Asia includes Indonesia, Malaysia, and Thailand Western Balkans includes: Albania, Montenegro, Serbia

17 Gradual integration in the European economic bloc will drive a powerful convergence toward greater prosperity

18 THANK YOU Ellen Goldstein World Bank Country Director for Southeast Europe