TIRANA, June 20 -The Bank of Albania has released its latest report on the development of the foreign sector of the Albanian economy during the first quarter of 2008. In the report, the governor of the Bank of Albania complained that there is little data on Albanian economic activity for the first quarter of 2008. Consequently, it is a challenge to generate a complete and detailed analysis for each branch of the economy.
The Bank of Albania declared that the main trends in the Albanian economy are as follows:
– Increased activity in the foreign sector expressed in the increase of the volume of current income and expenses
– Growth of the current account deficit and trade deficit
– Increase of financial obligations to foreign investors because of the increase of direct foreign investments and other short-term investments
– Drop in the foreign currency reserve of the monetary authority
Remittances from Albanian migrants dropped five percent
During the first quarter of 2008, Albanian migrants working abroad sent some Euro 219 million to their families in Albania. Nevertheless, compared to the first quarter of 2007, Albanian migrants sent five percent less during the first quarter of 2008. The Bank of Albania explains that Albanian migrants are switching from sending money to support their families to investing in new businesses in Albania. However, a report produced by the World Bank concluded that remittances began to decrease after migrants have lived more than 14 years abroad. Some Albanian migrants are reaching this 14-year threshold and they are expected to send less money home. The remittances are very important for Albanian families and the Albanian economy. During the first quarter, the remittances financed almost 41 percent of the trade deficit of Albania.
Trade deficit grew 19 percent compared to first quarter 2007
The foreign trade volume for the first quarter of 2008 reached Euro 942 million, or 17 percent higher than during the same period last year. During the first quarter of 2008, the trade deficit fell by some 17 percent compared to the last quarter of 2007 due to the fall in the imports of around 12 percent and the increase of exports by some 4 percent.
However, compared to first quarter of 2007, imports and exports increased by 18 percent and 13 percent respectively, while the trade deficit increased by some 19 percent.
Only 26.5 percent of imports were covered, such as those paid by Albanian exports. The ratio of imports vs. exports for the first quarter is some four percent higher compared to the last quarter of 2007. During the first quarter of 2007, Albanian exports paid for 27.5 percent of imports. The trade deficit grew to Euro 531 million, or 20 percent higher than during the same period last year.
Only in April 2008, the exports and imports grew by 32 percent and 17 percent respectively, compared to April 2007.
The structure of exports remains oriented to re-exports produced with buyer’s material. The annual growth in exports of ‘textiles and footwear’ was 7.3 percent. The share of exports of ‘textiles and footwear’ dropped by about three percent compared to the first quarter of the previous year (53 percent). The exports of ‘construction and metal goods’ and ‘machinery, appliances and spare parts’ increased compared to the first quarter of 2007 by 38 percent and 39 percent, respectively. Their share in the export structure grew during the same period by about four percent and one percent, respectively.
Unfortunately, the demand for imported consumer goods remains high and it has worsened the trade deficit and the current account deficit. Imported consumer goods constitute 36.4 percent of imports and their import increased by some 36.6 percent compared to the first quarter of 2007. Imported capital goods constitute only 15 percent of total imports.
The price of electricity increased by some three percent during the first quarter of 2008 compared to the same period last. However, due to increased domestic production, the import of power was reduced both in value and quantity by 14 percent and 16 percent, respectively.
The import of oil and its sub-products increased during the first quarter by some 46.7 percent compared to the first quarter of 2007. However, only 1.5 percent of the increase is the result of the increase of the volume of oil and other fuels imported during this period. 44.5 percent of the increase is caused by the increase of the price of oil in the world market. The import of oil and other fuels constitute 6.7 percent of the total imports.
Our main trade partners remain Italy and Greece
Our main European Union trade partners remain Italy and Greece. The trade volume with Italy and Greece represent about 36 percent and 13 percent of the foreign trade volume during the first quarter of 2008. 70 percent and 9 percent of the Albanian exports are directed, respectively, towards Italy and Greece. Albania imported, during the same period, goods worth Euro 320 million from Italy and Greece, or 48 million more compared to the same period last year.
Our main non-European Union trade partners are China, Turkey, Macedonia and Croatia. Albanian exports to Turkey grew during the first quarter 2007 period to first quarter 2008 by some 84 percent. Exports to Macedonia grew during the same period by 101 percent. Exports to Croatia, although at low levels, have increased by 12 times compared to the same period in 2007.
During the first quarter of 2008, it is noted that Albania is importing less from the countries of the region and more from European Union members. Imports from Turkey, for example, fell by four percent, while imports from Serbia and Montenegro fell by almost 90 percent compared to the first quarter of last year. Imports from Macedonia and Bulgaria broke this trend. Imports from these two countries increased by 16 percent and 13 percent, respectively, compared to the first quarter 2007.
Exports to China fell by some 60 percent. Simultaneously, imports from China to Albania increased by 12 percent. Chinese imports comprise seven percent of total imports of Albania.
