Albania and WB after Coronavirus: Opportunities in New Global Economy?

“The EU and its member states are already the major economic co-operation partners for Albania and the other WB countries. On the occasion of the EU Western Balkans Summit in Zagreb on 6 May the European Commission was invited to come forward with a robust economic and investment plan for the region aiming to boost the economies while improving their competitiveness, to better connect them within the region and with the EU. This is even more important now as the Corona virus has hit the economies of the region hard,” said Austrian Ambassador Christian Steiner

“The EU-integration of Southeast Europe is a very dear objective of Austrian EU Policy. We believe that the EU is not complete without the countries of the Western Balkans being members of the EU. Therefore we fought very hard to make a positive decision on the opening of EU accession negotiations for Albania and North Macedonia possible,” has said Christian Steiner, Austrian Ambassador to Albania.

Ambassador Steiner, whose diplomatic career began as Attaché at the Austrian Embassy in Tirana in 1996-1997, made that comment in his opening remarks in the Webinar under the topic ‘Albania and the Western Balkans after the Coronavirus: opportunities in the new global economy?’ organized by the Austrian Embassy in Tirana and the Vienna Institute for International Economic Studies as an online event on Wednesday.

Among many questions addressed during the Webinar the answers were given by the panelists on issues as the most important economic impact of the Coronavirus on Albania and the Western Balkans, if the crisis might lead Western firms to invest less in Asia and more in Eastern Europe in the future, the eventual ability of Albania and the Western Balkans to be able to take advantage of near-shoring by Western firms in the coming years. In addition there were questions on the main opportunities for Albania and the Western Balkans in the post-Coronavirus global economy and the possibilities of the EU to help economic development in the Western Balkans and support integration into European value chains.

The above questions were explained by the following panelists : Richard Grieveson, Deputy Director at the Vienna Institute for International Economic Studies (wiiw), Arben Malaj, Professor of Economics and President of the Institute for Public Policy and Good Governance, University of Tirana (Albania), Milica Uvalic, Professor of Economics at the Department of Political Science, University of Perugia (Italy). Moderator of the Webinar was Mario Holzner, Executive Director the Vienna Institute for International Economic Studies (wiiw).

Political criteria and economic development essential in EU accession

In his opening remarks the Austrian Ambassador Steiner stressed that after the EU Council gave the green light on 25 March this year the Union is looking forward to the necessary reforms on the political criteria being taken swiftly by Albania and on Tuesday a draft Action Plan was presented in the Albanian Parliament to this extent.

“Of course it is not only about political criteria but economic development is essential for progress in EU accession negotiations. The EU and its member states are already the major economic co-operation partners for Albania and the other WB countries. On the occasion of the EU Western Balkans Summit in Zagreb on 6 May the European Commission was invited to come forward with a robust economic and investment plan for the region aiming to boost the economies while improving their competitiveness, to better connect them within the region and with the EU. This is even more important now as the Corona virus has hit the economies of the region hard,” said the Ambassador.

However, as Vienna’s top diplomat in Tirana said, there may be also chances arising from this crisis as the investment pattern for some productions may be shifting to locations closer to the European markets.

“We look forward to this development in particular as regards the Western Balkans. Therefore I am very glad that the Vienna Institute for International Economic Studies with their great knowledge and experience in the region agreed to do a webinar on possible new opportunities for Albania and the WB after the Corona virus for which I would like to thank its Director Mario Holzner and his team. I am also very grateful to Deputy Director Richard Grieveson, Prof. Arben Malaj and Prof. Milica Uvalic for their contributions and to all the participants in Albania and abroad for joining us and look forward to an interesting Webinar,” said in conclusion of his remarks the Austrian Ambassador, Christian Steiner.

Albania can benefit from Western businesses relocation from Asia

In his contribution during the online event Richard Grieveson, Deputy Director of the Vienna Institute for International Economic Studies, said there were recessions everywhere, but big range depending on various factors. But he predicted mostly robust recovery from 2021.

Further on Grieveson said that the death rate in Eastern Europe because of the coronavirus pandemic has been dramatically lower than in Western Europe. But CEE countries imposed major restrictions at a much lower level of confirmed cases, he said, adding that easing of lockdown measures have generally been more cautious in Western Balkans than the rest of Europe.

Trade and tourism dependence leaves some countries particularly exposed to initial fallout, according to Grieveson. He listed potential areas of resilience for Western Balkans some of which are as following: Generally lower spread of virus than in most of rest of Europe; mostly less integration into global value chains, and specifically automotive sector; quick and significant international support (learned from 2008); spill-overs from monetary and fiscal stimulus in the euro area; positive risk: quicker-than-expected bounce-back for tourism.

In addition he noted that there might be higher (and maybe more progressive) taxes, and he saw a bigger role for the state in economic life and labor shortages and automation will return after a pause. In the meantime, the Austrian economic researcher said that China’s economic role in the region will remain important.

“Albania can be a new beneficiary from the relocation of the businesses of the Western countries from Asia,” said in his contribution Arben Malaj, President of the Institute for Public Policy and Good Governance. “This will not be a simple process but we should identify the advantages and reduce the disadvantages,” said Malaj, a former Minister of Finance and Economy.

In his analysis on this topic he highlighted as main advantages the following: the demographic dividend which means young population; the human and social capital as the young people are risk takers and ambitious for the economic knowledge; the high number of emigrants and Diaspora that have a long and successful experience in Western countries can be linking bridges of the new relocation of the businesses; and lastly the closeness with the potential markets.

Further on, Malaj said that the Euro- Atlantic integration has a positive influence on the productive restructuring of the Albanian economy.

But the economy professor drew the attention that the structural reforms in the labor market, the functioning of the rule of law, the fight against the state capture and corruption remain real preconditions for absorbing foreign direct investments (FDI).