FLASH NEWS
Albania loses leadership in the region - Deposits do not keep pace with the economy
2024-12-10 08:47:04 / EKONOMI&SOCIALE
The growth of deposits in recent years has been slower in relation to economic growth.
This has caused Albania to lose its leadership as the Western Balkan country with the largest amount of bank deposits to the economy.
Comparative data from the International Monetary Fund (IMF) show that at the end of 2023, bank deposits of Albanians were 62.91% of the Gross Domestic Product (GDP).
This indicator has fallen for the third time in a row. In 2022, deposits accounted for 64.89% of GDP, while in the pandemic year 2020 this ratio had reached the record level of 75.44%
However, the rapid economic growth in the period after the pandemic has not been followed by an increase in the same size of deposits.
The effect of the exchange rate has undoubtedly had a significant effect. More than half of the bank deposits in Albania are in the euro currency. Even the increase in deposits in recent years has come mainly in European currency. However, the devaluation of the euro against the lek (almost 25% since the pandemic) has negatively affected the value of foreign currency deposits and their ratio to national production.
Now, Albania is no longer the country with the largest amount of savings held as deposits against GDP. This ranking last year was headed by North Macedonia, where deposits have a value of 64.19% of GDP. Albania ranks second with 62.91%, but closely followed by Kosovo, with 62.81% of GDP. Followed by Montenegro with 53.42%, Bosnia-Herzegovina with 51.16% and Serbia with 48.99%.
In general, individuals in the Western Balkans region remain committed to more traditional savings instruments. This tendency has been quite pronounced among Albanians as well. Although in the last decade there has been an increase in investment in Albanian government debt instruments, directly or through investment funds, the vast majority of Albanians prefer to keep their money in bank deposits.
It is estimated that at the end of last year, bank deposits made up about 84% of the total savings of Albanians, while the rest is distributed between government treasury instruments, investment funds, pension funds and bonds of commercial companies.
The dominance of deposits can be partially related to the lack of developed capital markets in the region. In 2023, a financial title issued by a private company was listed on the Stock Exchange for the first time in Albania, but since then there have been no other developments.
The high level of deposits in our country has also been supported by remittances, with a good part of emigrants' savings being kept in Albanian banks.
Public deposits form the basis of financial intermediation activity in Albania and being a rich market in deposits has helped to develop a stable banking sector independent of foreign sources of financing.
According to statistics from the Bank of Albania, at the end of September 2024, total bank deposits reached 1.641 trillion ALL or almost 16.7 billion euros. Compared to a year ago, deposits increased by ALL 88 billion or 5.7%./ Monitor
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