TIRANA, June 28 – Exports extended their decline to 8 percent in the first five months of the year affected by a sharp decline in commodity prices and the bankruptcy of Kurum steelmaker.
Fuel and mineral exports almost halved to 15 billion lek (euro 110 million) in the first five months of this year as commodity prices dropped to record low affecting production, employment and government revenue.
The surprise bankruptcy of the country’s largest steelmaker, Turkey’s Kurum, is also having a negative impact on exports.
Exports of construction materials and metals dropped by 27 percent to Euro 88.5 million in January-May 2016 while the suspension of work at Kurum caused a sharp 94 percent decline in steel-dominated exports to Turkey which dropped to a mere Euro 3.3 million.
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.
The garment and footwear industry, locally known as faà§on, increased its exports by an annual 24 percent to 44 billion lek (€318 million) in the first five months of this year on improved demand from Italy, the destination of the overwhelming majority of 90 percent of exports of this kind.
Meanwhile, the positive investment trend fueled by the VAT free policy continued with imports of “machinery, equipment and spare parts” up by 10 percent to 47.5 billion lek (Euro 341 million).
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 poorly diversified and low value-added exports could face headwinds over the medium term due to oil price shocks and tougher competition in the key garment and footwear from new Asian frontier markets, warns the IMF in a recent country report.
Albania is a net importer with exports covering only about half of imports.
