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BB: Poverty will increase in Albania, due to the high prices of energy and food

2022-11-09 08:10:57Biznes SHKRUAR NGA REDAKSIA VOX
BB: Poverty will increase in Albania, due to the high prices of energy and food
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Poverty may become sharper and deeper in the countries of the Western Balkans as a result of the record increase in food and energy prices, the World Bank recently analyzed in the regular regional economic report.

Welfare levels in Albania will fall by about 4 percent due to high inflation, while poverty will increase by about 8.4 percent.

With prices rising rapidly around the world, the World Bank updated the relative poverty lines in nominal terms. In poor low-income countries the poverty line is US$2.15 per day, in low-middle-income countries the poverty line is US$3.65 per day and in high-middle-income countries where Albania is also a part, this limit is 6.85, from 5.5 dollars that was last year.

The World Bank indexed the poverty line for countries like Albania by about 21 percent within a year, but the incomes of families in the poorest decile in the country have not increased at the same rate over the last year, making even families others to be included in the poverty level.

Before COVID-19, the Region had made significant progress in reducing poverty. Between 2016 and 2019, the poverty rate is estimated to have fallen by around 10 percentage points. Improvements in welfare stalled when the crisis caused by the pandemic drove all six Balkan economies into recession in 2020. The number of poor people rose by 155,000 new people.

In 2021, the economies of the Region experienced rapid economic growth, which affected the reduction of poverty by an average of 3.5 percentage points, where it was estimated that about 547,000 people had come out of poverty. In Albania, poverty decreased by more than 6 percentage points in 2021 compared to 2020, as a result of some methodological changes in the evaluation of the phenomenon by the World Bank.

According to the baseline scenarios, in 2022 poverty in the region is predicted to decrease by about 1 percentage point, equivalent to about 144,000 people. According to the baseline scenarios, poverty in Albania is predicted to decrease further in 2022 by 2 percentage points.

However, in the absence of supportive measures from the government, the increase in food prices will further increase the estimated level of poverty (according to the standards of upper middle income).

Average impacts on welfare loss are large and varied from -4.9 percent in Albania to -10.2 percent in North Macedonia. In the poorest decile the losses are even greater.


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