Albania's economy expanded by an annual 3.21% in the second quarter of 2016, accelerating from a 2.96% y/y increase in the previous quarter, preliminary data from the statistics institute INSTAT indicated on October 7.

The International Monetary Fund (IMF) expects the Albanian economy to expand by 3.4% in 2016. According to the central bank, the growth in employment, improvement of business confidence and continuation of high inflows of foreign direct investments contributed to the increase of consumption and private investments. These aggregate demand components will continue to drive growth in the quarters ahead.

Economic growth in Q2 was driven mainly by the trade, transport and hotels sector, which contributed 0.7pp, followed by the professional and administrative services sector (+0.51pp), the data showed.

Professional, scientific and technical activities posted the strongest annual growth rate of 10.23% y/y in Q2, followed by the information and communication sector (+10.02%).

Only the agriculture, forestry and fishing sector contracted in Q2, -1.48%.

On a quarterly basis, Albania's GDP rose 0.91% in Q2, following a 1.2% q/q increase in the previous three months.

In terms of the main components, gross fixed capital formation went up by 4.37% y/y in Q2. Household final consumption, which accounts for an important part of the total economy, rose by 3.98% y/y, while general government consumption was 1.68% higher y/y.

Exports of goods and services grew by 3.86% y/y while imports jumped 19.79% y/y in Q2.

Economic sectors  GDP growth y/y change	Q1 2016 GDP	Q2 2016 GDP
Agriculture, forestry, fishing	-0.27%	-1.48%
Extractive industry, manufacturing, energy and water supply	-2.02%	1.4%
Construction	7.58%	1.81%
Trade, transport, hotels	5.75%	4.98%
Information and communications	14.58%	10.02%
Financial activities and insurance	0.67%	3.85%
Real estate activities	3.73%	8.07%
Professional, scientific and technical activities	4.22%	10.23%
Public administration, education, health	0.87%	3.28%
Arts, entertainment, recreation	2.8%	8.32%
Net taxes	3.22%	5.83%
Source: INSTAT