By ANDI BALLA
When the IMF released its 2010 forecast for economies inside the Organization for Economic Cooperation and Development, the largely rich club of developed countries, it was clear things weren’t looking good for Greece and Italy. Their economies are expected remain in the red in 2010, as they will likely again see negative growth.
What’s wrong with this picture? These two countries are also Albania’s largest trading partners. And they host the largest communities of Albanian workers abroad.
The rosy economic outlook for Albania might be turned on its head if Italy and Greece continue to suffer economically. Albanian economic growth might be positive right now, but if these important neighbors continue to put a pinch on their purchasing power and see higher unemployment, Albanians will also feel the pain in ways that might not be easily measured by economic indicators.
Let’s first look at what is measurable. Albania’s economy is very integrated with its two EU neighbors. They buy most of our exports and we get most of our imports from them. If Albanian businesses can’t sell their goods or services, people lose their jobs, and businesses shut down. It is already happening in Albania’s manufacturing sector.
Remittances have seen a falling trend for years, but they could really take a dive as Albanians in Italy and Greece loose their jobs or can’t find work.
One way to go is hedging Albania’s bets by diversifying foreign trade. It won’t be easy. In the EU as a whole things are not looking any better. Its economy will shrink or stay at the same level, according to the IMF. Germany, Albania’s third largest trading partner is fairing worst than Italy and a little better than Greece.
The world as a whole might see some growth, but the problem is that the rich OECD countries that will see growth are far away lands like Canada, Japan and the United States, with which Albania has little trade compared to the EU, and where Albanian immigrant communities are either nonexistent, as is the case with Japan, or smaller and more geographically removed from Albania, as is the case with the two North American countries.
In terms of the human factor, the economic crisis in the host countries and the steady improvement in the quality of life inside Albania may force many Albanians who have spent years in other countries to return home.
The results will be a mixed bag. While some have saved and can return home to start a new life from a good position, many will be just as poor as when they left, often having spent their most productive years in the foreign lands.
So the return could spell a lot of problems for Albania, but on the other hand could provide new opportunities that come with a newly available and experienced labor force.
Ultimately, for Albania’s economic outlook, economic developments and personal decisions made in places like Athens and Rome might be just as important as what happens in Tirana.
