Bank of Albania Governor Gent Sejko said today that the Albanian economy will continue to grow at stable rates close to its potential in the coming quarters, while inflation will rise slightly above target in the second half of the year before gradually returning to target over the medium term.
First, the Supervisory Council of the Bank of Albania approved the Interim Monetary Policy Report, and Sejko presented key developments in inflation, economic growth, and financial stability.
Next, he said inflation increased in the second quarter mainly because international oil prices rose, while the economy continued to expand in the first half of the year and financial markets remained stable.
Moreover, he said policymakers expect geopolitical tensions to ease and oil prices to normalize over time, although he warned that inflation risks remain tilted upward and growth risks remain tilted downward.
In addition, Sejko reported that inflation averaged 2.9% in April–May, up from 2.5% in the previous quarter, and he said higher fuel prices drove most of this increase.
Furthermore, he explained that higher prices for unprocessed food and selected services also pushed inflation upward, while rent inflation declined and other components of the basket remained stable.
At the same time, he said global supply shocks increased imported and non-core inflation, but he added that strong domestic demand and supply balance, a stable exchange rate, and anchored expectations kept core inflation close to target.
Turning to economic activity, Sejko said INSTAT data showed that the economy grew by 3.7% in the first quarter of 2026, and he said households increased consumption, businesses expanded investment, and exports of goods and services supported overall growth.
Meanwhile, he said fiscal policy remained focused on consolidation, while services and construction drove growth and agriculture and industry contracted.
Additionally, he said available data suggest similar growth patterns continued into the second quarter.
On the labor market, Sejko said conditions improved further, and he reported that private non-agricultural employment rose by 2.2%, while average private sector wages increased by 11.5%, and unemployment remained at 8.4%.
However, he warned that labor market imbalances may create inflationary pressure in the future, even though productivity gains and lower profit margins have so far absorbed these effects.
Furthermore, he said Albania strengthened its macroeconomic stability, as public and external debt declined and households and businesses maintained strong and liquid balance sheets.
Similarly, he said the banking sector remained stable and resilient, while financial markets stayed calm and financing conditions supported economic activity.
In addition, he credited monetary policy for these results, explaining that timely policy actions helped stabilize inflation expectations, maintain price stability, and improve financial conditions.
Finally, he said banks expanded lending, with credit growing by 13.8% in May, and he said this growth supported investment, consumption, and housing demand.
In conclusion, he said inflation will rise slightly above target in the short term due to external shocks, but he stressed that this increase will remain temporary, and he confirmed that inflation will gradually return to target while the economy continues to grow steadily in line with its potential.
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