Report on industry for start of 2007

The Albanian Center for research and Development published a detailed report on the situation of Albanian business and industry on Wednesday. Detailed according to thematic separations the report addressed all important indicators of Albanian economy in relation to the business climate, such as infrastructure, employment, energy crisis, regulations, etc. For the end of 2006 the report shows that the power crisis has not affected the industry sector substantially in the quantity but in the price level. Inflationary pressure is expected once the gross producers start affecting the medium size business prices.
Production: The confidence indicator stands at 4 points, up 6 points from last year. This indicator should be adjusted to the seasonal character of some business though. Production estimates for the next three months records positive results. The start of 2007 has higher chances that the same period last year to give more domestic contribution to the economy. Slower sales have resulted in higher inventory levels. Stocked final goods record 37 points higher in the specific indicator.
Employment: In the next three months higher labor demand is predicted with a indicator of 25 points. Almost double the same period last year. Given the low quality of the labor force this demand might result in higher wages. The rising cot of production will add up to the inflationary pressure.
Production capacities. Technological capacities are used at the level of 68 percent, 3 percent higher than three months ago and a median figure for the last two years. This indicator shows simultaneously a good stability factor but also a negative impetus for investment. The remaining 32-35 percent of capacities could be used to increase production and help the economy.
Elaborating o the potential impeding factors, the report points out the following:
1. Fiscal legislation : Only 19 percent of the surveyed subjects identified legislation as an obstacle. This low level can be explained due to the latest measures of the government to help business deal with bureaucracies and to lower the time spent in administrative purposes. Initiatives like the business one stop shop and lower requirements for a new business opening are examples of the improvements
2. Energy crisis : An overwhelming 80 percent of surveyed subjects pointed out the power cuts as their main concerns. The lingering energy crisis has presented the production sector in the country with severe setbacks. The situation is portrayed as severe as in 2004.
3. Insufficient local and foreign demand
Insufficient domestic demand has been a problem to 28 percent of the surveyed subjects, a 5 percent drop from the average of the 2002-2006 period, and 8 percent lower than last year. As far as foreign demand is concerned less people are affected by it. From 17 percent of the last three months to 8 percent is the decrease of traders that think it is a problem. Better relationships and new agreements with the EU countries have resulted in a more positive climate in this regard.
5. Qualified labor force
the lack of qualified labor is one of the factors that is producing long term effects in the industry sector. In the period 2002-2006, the latest figure is he highest. Almost 40 percent of the surveyed people answered that lack of labor will result in higher wages for the existing expertise and consecutively in higher prices, given that wage is an integral part of the production cost.
6. Informality
Unfair competition and other features of the informal market have been mentioned by 40 percent of the subjects. The figure is more or less constant over the span of all 2006 surveys.
7. Corruption
Corruption has been described as rampant in taxation authorities. Te good news is that a low percentage of surveyed subjects have mentioned it as a main impediment. The 9 percent number is the lowest recorded so far and shows better expectation for changes in these negative patterns for 2007.
8. Infrastructure
Infrastrucural problems and especially the oens related to the siautiaon of the roads will remian a major concern for Albanian producres. Despite the significant launches of new road projects 43 percent of the surveyed mentioned it as one of their main problems. This level is 29 percent higher than three months ago. Hence, the need of further investments.