A recently released Business Monitor International report states that Albania's relatively low level of trade and financial integration with Western Europe will not protect its economy from the marked deterioration that has occurred in eurozone macroeconomic and financial market conditions over the past few months. The eurozone appears to have slumped into recession, with Italy, Albania's largest export market, a focus of the region's current woes.
The formation of a new centre-right party which looks set to receive the backing and leadership of President Bamir Topi adds new dynamism to Albania's political landscape and improves the electoral chances of the opposition Socialist Party. However, the bigger issue for Albania will be the conduct of upcoming elections, rather than their actual result. A controversial election in 2013 would scupper the country's chances of being granted EU candidate status and add to the damage already done to the country's accession ambitions.
Albania's strong economic and financial links to Greece and Italy remain a key risk to our outlook, even beyond the extent to which we have factored this exposure into our forecasts. On top of being the source of economically important remittance inflows, Albania's commercial banking sector is dominated by Greek subsidiaries. An uncoordinated credit event in Greece would put those parent banks under pressure, possibly leading to a sharp withdrawal of credit from their peripheral operations. Source; Fast Market Research