The value added tax, which is levied at a fixed 20 percent rate on almost every product and service rose by 17.6 percent in the first two months of 2014, unveiling signs of a recovery in domestic consumption which has been the traditional key driver of the Albanian economy
TIRANA, March 24 – A double-digit rise in VAT and a recovery in imports of machinery, equipment and spare parts in early 2014 hints the Albanian economy is heading toward recovery after growth is expected to have decelerated to only 0.7 percent in 2013, the lowest growth rate in more than a decade.
Finance Ministry data show the value added tax, which is levied at a fixed 20 percent rate on almost every product and service rose by 17.6 percent in the first two months of 2014, unveiling signs of a recovery in domestic consumption which has been the traditional key driver of the Albanian economy.
Imports of machinery, equipment and spare part, an item which indirectly measures private investments, unveils Albania’s private sector, which accounts for 80 percent of the GDP and provides the overwhelming majority of employment, is slightly more optimistic this year.
Data by the country’s state statistical institute, INSTAT, show imports of “machinery and equipment” slightly rose by 1.6 percent to 6.3 billion lek (Euro 44.3 million) year-on-year in January 2014.
The Albanian economy is expected to have registered positive growth in the final quarter of 2013 after the 2.3 percent shrink in the third trimester. Both government and the IMF which is assisting the Albanian government return to sustainable growth under a deal supported by a Euro 331 million soft loan expect Albania to have registered a 0.7 percent growth rate for 2013 and recover to 2 percent in 2014.
INSTAT is scheduled to publish the GDP for the final quarter of 2013 on April 2, 2014, according to its schedule of publications.
In its latest publication on the third quarter of 2013 when the Albanian economy contracted by 2.23 percent year-on-year, INSTAT revised upward the growth rate for the first quarter of 2013 to 1.87 percent, up from a previous estimate of 1.7 percent while the growth for the second quarter of the year was raised to 1.68 percent, up from 1.1 percent previously.
The revisions to the growth rates mean the Albanian economy has grown by 0.4 percent in the first three quarters of 2013, up from an estimated 0.2 percent under the previous growth rates.
The Albanian economy has been facing tough times in the past couple of years after growing by an average of 3 percent annually in 2009-2011 and slowing down to 1.3 percent in 2012 affected by spillover impacts from top trade partners Italy and Greece and problems with public finances at home with public debt having climbed to around 70 percent of the GDP and lending having plunged to moderate negative growth rates.
