This report covers the main macroeconomic releases in December 2013 and financial and political events that took place in Albania during this period. It also includes industry news for firms including steelmaker Kurum International, Belle Air and several foreign airlines (among them Alitalia and AirOne) and Canada-based Bankers Petroleum. The report further discusses World Bank 2014 projections for the region’s SEE6, which besides Albania includes Bosnia, Kosovo, Macedonia, Montenegro, and Serbia.

The last month of 2013 brought Albania the discouraging news that the EU Council again refused to grant the country EU candidate status and postponed the decision to June 2014. In the meantime, Standard & Poor’s lowered Albania’s long-term foreign and local currency sovereign credit ratings from B+ to B, citing concerns over the rising debt burden. The country’s short-term ratings were affirmed at B.

Albania's economy is expected to grow by 2.1% year on year in 2014, speeding up from 1.3% year on year in 2013, according to the macroeconomic framework of the 2014 state budget draft. This year’s GDP growth estimate is in line with the latest forecast by the World Bank. Consumer prices in the country grew by 1% year on year in November, easing from a 1.7% rise in October with the overall trend again determined by food prices. Albania’s producer prices picked up by 0.1% year on year in the third quarter of 2013, reversing from a 0.5% year on year drop in the previous quarter.

Key Points:

• In corporate news, steelmaker Kurum International will receive a a EUR 106mn 8-year debt facility from the World Bank’s International Finance Corporation (IFC) for the acquisition and upgrade of four hydroelectric plants. Following the collapse of Belle Air in Tirana, several foreign airlines have expressed interest in increasing their activities in Albania. And the Canadian oil-and-gas explorer Bankers Petroleum will invest a record USD 313mn in Albania in 2014.

• The World Bank has cut the South East Europe’s region 2014 GDP growth outlook to 1.8% from a previous forecast of 2.7%, citing uncertain export prospects, subdued domestic demand and significant external risks. The Bank report covers six countries of the region (SEE6), Albania, Bosnia, Kosovo, Macedonia, Montenegro and Serbia. The slowdown next year will be driven by Serbia which accounts for 45% of the region’s economy.

• The Albanian government reached an agreement with the IMF on a 36-month Extended Fund Facility (EFF) for a total amount of EUR 300mn. The financial support has been requested by the government in order to enable clearance of arrears and unpaid bills towards the private sector.