COVID-19 had an impact on Albanian citizens and its economy, but the authorities acted quickly to contain the spread of the virus, and took measures to mitigate the negative effects of restrictions on the economy. Yet, the medium- to long-term economic and social impact of the pandemic will largely depend on pre-existing socio-economic vulnerabilities and policy resilience. This chapter assesses the impact of the pandemic on the Albanian citizens and reviews the most binding channels of socio-economic exposure and policy resilience. In particular, as a small and open economy, Albania is particularly exposed to a reduction in global trade flows and financing, as well as a weakening tourism sector. Building resilience will depend on the strength and capacity of institutions to timely design and implement policy measures, as well as on the citizens’ trust in the public decision-making process and the efficiency of the public administration.
Multi-dimensional Review of the Western Balkans
4. Impact of COVID-19 in Albania
Abstract
Evolution of the pandemic
Albania has experienced several waves of the pandemic. The economy reported the first case of COVID-19 on 8 March 2020. Two and a half months later, there were around 300 cases and 10 registered deaths per million inhabitants. The latest data show that Albania had the lowest cumulative number of cases in the Western Balkans with 131 517 cases (45 953 cases per million inhabitants). On 26 May 2021, it registered the lowest rate of daily new cases in the region (7 per million inhabitants) (Figure 4.1). Albania has also the lowest number of registered deaths from COVID-19 in the Western Balkans with 2 433 deaths (850 per million inhabitants) (Figure 4.2).
The prime minister declared a state of natural disaster throughout the economy on 25 March 2020. The government then prolonged the state until 23 June 2020 and took a series of measures to control the epidemic (Figure 4.3). Albania had in place policy framework that provided a basis for dealing with the outbreak. It includes the National Civil Emergency Plan of Albania, the Ministry of Health and Social Protection Emergency Operation Plan, the National Pandemic Influenza Preparedness and Response Plan, and the Infectious Diseases Hospital Crisis Prevention Plan, Focused on Pandemic Flu H1N1 (WHO/European Commission/European Observatory on Health Systems and Policies, 2020[1]).
Figure 4.1. Albania registered a relatively high number of new daily cases relative to its population
Daily new confirmed COVID-19 cases per million inhabitants, rolling seven-day average
Source: Authors' calculation based on Our World in Data (2020[2]), Our World in Data website, https://ourworldindata.org/.
Figure 4.2. Albania has the lowest number of registered deaths per million inhabitants in the Western Balkans
Cumulative number of confirmed COVID-19 deaths per million inhabitants
Source: Authors' calculation based on Our World in Data (2020[2]), Our World in Data website, https://ourworldindata.org/.
Albania acted quickly to contain the spread of the virus, but future resilience may be at risk. On 10 March 2020, just two days after the official outbreak, the government announced the first lockdown measures: all private and public transport was banned in 8 out of 12 counties (qarku), and public gatherings were strictly forbidden. These measures were successfully implemented immediately after the announcement. Since 11 March, the government has put in place stringent and timely measures to curb the spread (Figure 4.3). However, Albania has been conducting fewer tests than the rest of the region (around 243 816 per million inhabitants, compared to an average of 405 202 in the Western Balkans) (Figure 4.4). While relaxing confinement, ramping up testing capacity is crucial in order to detect a possible new wave of contagion early. With 9 people fully vaccinated per hundred inhabitants by the latest available data, vaccine capacity in Albania is above the region average but lower than both the OECD and EU averages (Figure 4.5).
Figure 4.3. Albania has put in place timely and stringent measures to curb the spread of the virus
Stringency index (0 = least stringent; 100 = most stringent)
Source: University of Oxford (2021[3]), “Oxford COVID-19 Government Response Tracker”, www.covidtracker.bsg.ox.ac.uk/r.
Figure 4.4. Testing capacity in Albania remains limited
Notes: Costa Rica officially became an OECD Member on 25 May 2021, therefore it is not included in the OECD averages in the current report.
Source: Worldometer (2020[4]), “Coronavirus”, www.worldometers.info/coronavirus/.
Figure 4.5. Vaccine capacity in Albania outpaces the Western Balkan average
Note: Last reported numbers are from May 2021.
Source: Worldometer (2020[4]), “Coronavirus”, www.worldometers.info/coronavirus/.
Policy responses and economic impact
The government has put in place numerous measures (amounting to 4% of GDP) to support the healthcare system, enterprises and households affected by the confinement measures (Table 4.1). It received emergency financing support from the International Monetary Fund, the European Union and other donors to help assist with the crisis response. Considerable fiscal, monetary and other policy responses will be required to mitigate the impact and to put Albania on a long-term growth trajectory. It will require the careful design and selection of policies and targeting that take into account the domestic context, institutional set-up and government capacities.
Table 4.1. Policy measures in response to the COVID-19 pandemic
Sources: OECD (2020[5]), “COVID-19 Policy Tracker”, http://oecd.org/coronavirus/en/#economy-policy-tracker.
The pandemic had a significant negative economic impact in Albania, as it was still recovering from the earthquake in late 2019. After growing by 2.2% in 2019, growth contracted by 3.3% in 2020. Despite the sever contraction in the second quarter of 2020, during the summer 2020 economic activity returned as restrictions were lifted. An increased construction in particular contributed to a GDP growth of 3% in the last quarter of 2020. Due to the reduced external demand, exports fell by 6.7% in 2020 (World Bank, 2021[6]).
Coronavirus COVID-19
The analysis of policy responses to the COVID-19 pandemic does not reflect the policy development that occurred since February 2021, with the exception of the figures on testing and vaccination for which the most recent and internationally comparable data were used.
Dimensions of vulnerability to further socio-economic impact from COVID-19
The short-term risk to human life from the COVID-19 has been curtailed thanks to authorities’ early response and citizens’ respect of confinement orders. Registered case and death numbers in Albania are among the lowest in the Western Balkans region (Figure 4.1 and Figure 4.2). The medium- to long-term impact will largely depend on pre-existing socio-economic vulnerabilities and the resources for resilience that the economy can mobilise. Taking pre-existing vulnerabilities into account can help policy makers to determine who needs support the most and what policies can help restart the economy and create conditions for sustainable and inclusive growth (Table 4.2).
Table 4.2. Albania’s socio-economic exposure and policy resilience to COVID-19
Note: Short-term debt is measured as share of T-bill (www.oecd.org/daf/fin/public-debt/Sovereign-Borrowing-Outlook-in-OECD-Economies-2018.pdf). Data are for 2018 unless otherwise specified. In particular:
*: 2016
**: 2017
***: 2019
1. OECD assessment.
Sources: Authors’ elaboration based on national and international data: Coppedge et al. (2020[7]), V-Dem Dataset -- Version 10 (dataset), www.v-dem.net/en/data/data/v-dem-dataset/; IMF (2020[8]), International Financial Statistics (dataset), https://data.imf.org/?sk=4c514d48-b6ba-49ed-8ab9-52b0c1a0179b; IMF (2020[9]), Financial Soundness Indicators (dataset), https://data.imf.org/?sk=51B096FA-2CD2-40C2-8D09-0699CC1764DA; IMF (2021[10]), World Economic Outlook Databases (database), www.imf.org/external/pubs/ft/weo/2020/01/weodata/index.aspx; IMF (2019[11]), World Economic Outlook, October 2019: Global Manufacturing Downturn, Rising Trade Barrier, www.imf.org/en/Publications/WEO/Issues/2019/10/01/world-economic-outlook-october-2019; INSTAT (2020[12]), Statistics by theme (database), www.instat.gov.al/en; OECD et al. (2019[13]), SME Policy Index: Western Balkans and Turkey 2019: Assessing the Implementation of the Small Business Act for Europe, https://doi.org/10.1787/g2g9fa9a-en; WHO (2020[14]), Global Health Observatory, https://www.who.int/data/gho.; World Bank (2020[15]), World Development Indicators (database), https://databank.worldbank.org/source/world-development-indicators; WTTC (2020[16]), World Travel & Tourism Council (database), https://wttc.org/Research/Economic-Impact/Data-Gateway.
Material well-being and social protection
The short- and medium-term impacts of the lockdown could increase the vulnerability of the most disadvantaged and risk compounding socio-economic divides. The unemployment rate, which was at historic low before the crisis at 11.2% in the last quarter of 2019 (INSTAT, 2020[12]), is likely to rise. The current crisis may have a disproportionate effect on those who live in poverty and do not have adequate social security. Close to 40% of households are severely materially deprived (Figure 5.1), and 23.4% of the population was at risk of poverty in 2018.
Informality is a major contributor to individual income risk. Informal employment accounts for about 61% of total employment, and the current crisis may highlight informal workers’ vulnerability as their incomes decrease. It could widen the economy’s inequality gap and push many people into poverty. Moreover, the many informal workers who cannot afford social distancing are more vulnerable to the pandemic (Gerdin and Kolev, 2020[17]).
A drop in remittances may lead to reduced household consumption and generate significant social strains for many people. A significant share of Albanian households depend on remittances, which accounted for 9.6% of GDP in 2019 and were higher than FDI inflows (7.9% of GDP). Potential further decline in remittances due to migrant workers’ loss of employment and wages would be the sharpest in recent history (World Bank, 2020[15]). Given that about 1.4 million Albanians live abroad, the impact might be significant (Government of the Republic of Albania, 2017[18]).
Albania’s social protection budget is very modest, and targeting is ineffective, limiting its scope to reach those most in need. Albania spent 9.4% of GDP on social protection in 2016, much lower than the European average of 28% (see the People section in Chapter 5). Spending on social assistance in particular needs to be ramped up, as social transfers, excluding pensions, reduced risk-of-poverty rates by fewer than three percentage points in 2018 and will be an insufficient safety net for the most needy during the pandemic (INSTAT, 2019[19]). As much as 32% of the population lacks sufficient social support.
Health and non-material well-being
Albania’s population is young, but there are persistent health risks. Close to one-third of adults in Albania smoke daily, and 21.7% are classified as obese, both of which are risk factors associated with higher COVID-19 mortality rates. The Albanian healthcare sector suffers from inefficiency and inequity. These vulnerabilities may be further exposed during the COVID-19 crisis. Albania spent 5.2% of GDP on health expenditure in 2018, less than the majority of comparable economies (World Bank, 2020[15]). Although health coverage has improved moderately compared to a decade ago, over 60% of adults aged 15 to 49 (64% of men and 62% of women) reported having no health insurance in 2018 (INSTAT, 2019[20]; INSTAT/Institute of Public Health/ICF, 2018[21]). The government has made COVID-19-related care available to all residents and waived out-of-pocket payments for such treatments (COVID-19 Health System Response Monitor, 2020[22]). The lack of equipment and staff is an issue. With 1.2 doctors per 1 000 inhabitants – a decline of 14% compared to 2000 – Albania has the lowest number of doctors per capita in the region and is well below the OECD and European figures (see the People section in Chapter 5). In the context of COVID-19, the government ordered the reactivation of retired healthcare staff, mobilisation of workers from various medical fields, engagement of medical students and residents, and additional financial incentives for health workers involved in the pandemic response (Order No. 174 and Order No. 175 of the Minister of Health and Social Protection of 15 March 2020). However, no specific measures are being taken to provide psychosocial or other occupational health support for health workers (COVID-19 Health System Response Monitor, 2020[22]).
Other, non-material, aspects of well-being are affected by the crisis. Living conditions at home, where most people are asked to stay during the crisis, are less than ideal for some: 43.3% of households in Albania lack high-speed Internet, making teleworking and home-schooling difficult. Quality of life is also about people’s relationships, which can provide a vital lifeline during crises and social distancing. Yet, one-third of Albanians say that they do not have relatives or friends they can count on for help in times of need. Even before the pandemic, life satisfaction was much lower in Albania than in the average OECD economy. The considerable risks of social isolation and loneliness need to be addressed by policy measures for both physical and mental health, for instance regular check-ins by social services, civil society and volunteers, and promotion of digital technologies that connect people with each other and with public services. In this regard, the World Health Organization is supporting the establishment of a platform for psychosocial and mental health support via a network of community mental health providers. There are also initiatives to home-deliver medicines for older patients with chronic conditions (COVID-19 Health System Response Monitor, 2020[22]).
Women are particularly exposed to the collateral effects of COVID-19. As in other regional economies, loss of employment and lockdown conditions in Albania are likely to have led to increased gender-based violence (Bami, 2020[23]; OECD, 2020[24]). Indeed, reports by civil society organisations (CSOs) and observers indicate that vulnerable groups have been particularly affected by the COVID-19 crisis, especially in remote areas. The government adopted a number of measures to mitigate the effects of the pandemic and lockdown and to ensure outreach to vulnerable people and groups at risk. The effectiveness of actions will depend in part on strengthened collaboration among the central government, local government units and civil society (European Commission, 2020[25]). Prevailing gender norms that normalise violence against women were a concern before the crisis: 30% of women considered a husband justified in hitting or beating his wife for trivial reasons, such as burning food, going out without telling him or refusing sex, compared to 8%, on average, in OECD economies. Women are affected in other ways too. They make up the majority of the healthcare workforce, exposing them to greater risk of infection. At the same time, women are shouldering much of the burden at home, given school closures and longstanding gender inequalities in unpaid work (see the People section in Chapter 5).
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