Global crisis could affect Albania, says Ruli
In an interview for BBC, Mr Genc Ruli, Minister of Economics, said that the global crisis could affect Albanian exports, foreign investments flow in the country, and remittances from immigrants evaluated in the range of 1 billion US dollars per year.
Q: Mr Ruli, to what extent do you think Albania will be affected by the current crisis in the international capital markets?
Ruli: Of course, Albania is not isolated from the international market therefore there will be consequences. However, since we are not fully integrated in the regional and global markets will be affected only to a certain degree regarding possible changes in foreign trade.
Q: Is there one sector of the Albanian economy directly affected by the global crisis?
Ruli: Our exports will be affected, considering that 90% of our exports are oriented toward EU countries and any decrease in growth and consumer demand in EU could reflect with a decrease in our exports. Of course, the impact will affect our manufacturing industry, but the phenomena as a whole can only have an isolated impact because our exports count for only a small percentage in our economy.
Q: Mr. Ruli, it is known that Albanian economy is always in need to attract foreign investments. How will the current crisis affect such investments?
Ruli: There are many ongoing major projects, especially those in the energy and infrastructure sector that need major financial support in sums of hundreds of millions in Euros, which would be difficult to acquire in full in the capital market, in the European or global financial market. Such difficulties may slow down the completion of these projects or may bring to their suspension until a second moment when trust in financial market will be regained.
Q: It is also known that Albania economy receives a nice dose of oxygen from immigrants’ remittances. Will they be affected?
Ruli: It depends on the scale of economic slow down or possible recession in Europe. The emigration factor is economically important regarding the employment of close to 1 million Albanian immigrants. A part of them risk unemployment. Without a doubt, it will be reflected in a decrease in remittances, an important article in our Payments Balance. It will also affect our Balance Sheet in foreign currencies, therefore increasing our deficit and exposing us toward a bigger financial risk.
Q: What is the percentage of these remittances in relation to our economy, if they can be evaluated?
Ruli: There have been several different evaluations regarding remittances with the average per year being close to 1 billion US dollars. This is a considerable inflow to our economy, whether it is for investment or for consume. A drop in remittances in the range of 30% will be directly reflected in short and mid-term investments and also in consume. It will probably be the first impact we will notice regarding remittances.
I would like to say, however, that is a positive fact that we are an economy in the process of integrating ourselves in the global economy, yet not fully opened to it. Our financial sector consists mainly of the banking sector, with commercial banks rather than investment banks, which help Albania being one of the countries less exposed to the global crisis and therefore suffer fewer consequences.
