TIRANA, Oct. 10 – The Albanian economy grew by an annual 3.2 percent in the second quarter of 2016, but agriculture, one of the key sectors employing about half of the country’s population but providing only 20 percent of the GDP, contracted for the fifth quarter in a row.
“Agriculture, forestry and fishing” had a negative contribution by 0.32 percentage points in the second quarter of 2016 growth when this key sector to the Albanian economy contracted by 1.48 percent year-on-year and was down by 1.4 percent compared to the year’s first quarter, according to a report by state statistical institute, INSTAT.
Albania’s currently developing agriculture is considered a key sector and future driver of economic growth following the ongoing slowdown of the long-ailing construction sector and remittance fueled growth in the past seven years.
However, credit to this sector still accounts for a minor 1.6 percent of credit to the private sector, being one of the most underfinanced sectors of the economy despite several projects by government and international financial institutions facilitating loans to agribusinesses.
Anecdotal evidence suggests that farmers have shifted to more lucrative cannabis production which seems to have flourished nationwide after police cracked down on the notorious Lazarat village in mid-2015 when they destroyed 102 tons of marijuana and 530,000 marijuana plants with an estimated market value at the time of some 6 billion euros, which is more than half of the country’s annual gross domestic product.
Albanian police say they have destroyed 2.4 million of cannabis plants in the first three quarters of 2016 spread over a 213 hectare area nationwide, a 3-fold increase compared to the whole of 2015.
Although it has been the sector with the most stable growth in the past six global crisis years, the Albanian economy continues remaining largely dependent on agriculture imports which are around six times higher compared to exports.
Experts say the small size of farms, lack of appropriate management of land and agricultural infrastructure and technology make the Albanian agricultural sector more problematic compared to other countries in the region.
The Albanian government and the IMF expect the Albanian economy to grow by 3.4 percent this year fueled by some major energy-related investment including the Trans Adriatic Pipeline and the Devoll hydropower plant by Norway’s Statkraft. The forecast is slightly more optimistic compared to what other international financial institutions such as the World Bank and London-based EBRD predict for the Albanian economy who key oil and mining sector has been severely affected by the slump in international commodity prices.
The Albanian economy has grown between 1 to 3 percent in the past seven crisis years compared to a pre-crisis decade of 6 percent.
