This report covers the main macroeconomic releases for Albania from early November till early December 2013, as well as the financial and political events that took place in Albania during this period. The report also includes corporate news for firms including Belle Air and Albpetrol.

In mid-November the European Bank for Reconstruction and Development (EBRD) cut Albania’s 2013 economic growth outlook to 1.2% from 1.6%, citing weak economic activity. The EBRD cautioned that fiscal challenges remain high, with public debt above 60% of GDP and a non-performing loans ratio at around 25%. The country’s GDP growth is projected to gain speed to 2% next year.

Albania’s general budget deficit more than doubled on the year in January to October, reaching 3.8% of the full-year GDP forecast as revenue fell while spending increased. In our view, higher spending on public investments could be partly explained by pre-election expenditures, as Albania held parliamentary elections on June 23.

Key Points:

• In corporate news, Airline Belle Air, which decided in November 24 to temporarily suspend operations, has filed for bankruptcy protection. State oil producer Albpetrol has approved a plan to optimize the company’s structure and envisages reducing its staff by 47% to 1,868 employees in Q1 2014.

• The foreign trade gap narrowed by 16.9 in January to October and accounted for 14.6% of the full-year GDP forecast. The lower deficit came as exports increased by 16.1% y/y, while imports declined by 5.2% y/y.

• Consumer price inflation in the country stayed flat at 1.7% y/y in October. The overall trend was again determined by food prices, which grew 3.5% y/y (slightly easing from 3.9% in September).

• The country’s unemployment rate also remained unchanged at 12.8% for the fifth straight quarter in Q3.