TIRANA, May 30 – A strong double-digit growth in garment and footwear sales is keeping Albania’s poorly diversified exports away from a sharp decline following a slump in international oil and mineral prices during the past year.
INSTAT data shows Albania’s exports were down by 6 percent in the first four months of this year affected by a sharp 42 percent contraction in oil and mineral exports as international commodity prices stand at a record low since mid-2014 with a negative effect on the country’s domestic production, employment and government revenue.
The sharp decline in oil and mineral exports whose share in the country’s total exports has dropped to about 16 percent, down from a record 40 percent in 2013 when oil prices were at their peak, has been compensated by the traditional garment and footwear industry which employs about 100,000 people and mainly relies on cheap labour costs.
The garment and footwear industry, locally known as faà§on, increased its exports by an annual 24 percent to 35 billion lek (€253 million) in the first four months of this year on improved demand from Italy, the destination of the overwhelming majority of 90 percent of exports of this kind.
Some 500 companies operate in the garment and footwear sector with their annual turnover estimated at €500 million and accounting for 40 percent of the country’s total exports.
The bankruptcy of Turkish-run Kurum steelmaker has also negatively affected exports of “construction materials and metals” which were down by 26 percent in January-April 2016. Exports to Turkey, mainly dominated by metals also dropped by a drastic 90 percent following the bankruptcy of Kurum earlier this year.
Prospects for exports appear more optimistic as international oil prices have currently recovered to about $50 a barrel compared to a 12-year low of $27 last January and around $110 a barrel from 2010 until mid-2014 when they embarked on a downward trend.
The poor diversification of Albania’s exports heavily relying on oil and base metals whose prices are currently at a record low is expected to have another negative impact on the country’s exports which dropped by 5 percent in 2015, returning to negative growth rates after a contraction in 2009 soon after the onset of the global financial crisis.
Albania is a net importer with exports covering only about half of imports.
