Imports of ‘machinery, equipment and spare parts,’ an indicator also measuring private investments, was up by 8.5 percent in the first half of this year, signaling a recovery in the Albanian economy which is expected to grow by 2 percent this year after registering its poorest growth in more than a decade in 2013.
TIRANA, July 28 – Fuelled by an increase in imports and a slowdown in exports, Albania’s trade gap registered a 10 percent increase in the first half of this year, according to data published by the country’s state Institute of Statistics (INSTAT).
With both exports and imports recovering by 10 percent in the first half of 2014, the trade gap in a net importer such as Albania rose to 128 billion lek (Euro 901 million), up from 116 billion lek (Euro 816 million) during the first half of 2013.
Meanwhile, the export/import coverage ratio remained almost unchanged at 50.3 percent.
Data published by the country’s state statistical institute, INSTAT, show Albania’s exports rose by 10.2 percent to around 130 billion lek (Euro 915 million) year-on-year in the first half of this year, fuelled by a 28 percent increase in garment and footwear sector, which has been the traditional top Albanian exporter in the past two decades and one of the key employers.
Garment and footwear products have emerged as Albania’s key driver of exports during this year at a time when “minerals, fuels and electricity,” the country’s top exports in the past couple of years, are suffering a slight shrink.
Earlier this year, government finalized a package of facilitating measures on garment and footwear producers in an effort to give a boost to this sector which has been the traditional top Albanian exporter and one of the key employers in the past two decades despite negative impacts from the Eurozone crisis in the past few years. The new package includes a series of measures which offer garment and footwear producers, locally known as fa谮, state facilities for a symbolic rent of only one Euro, accelerate VAT refunds to 30 days, and lift of a series of customs barriers. However, the corporate income tax, a top concern for the fa谮 industry, will remain unchanged at 15 percent, the same to all medium-sized and big enterprises after Albania abandoned its 10 percent flat tax regime to replace it with progressive taxation starting 2014.
INSTAT data shows exports of minerals, fuels and electricity continue leading Albanian exports despite a 3.3 percent decline in the first six months of this year. Due to rising oil exports by Canada-based Bankers Petroleum, exports of minerals and fuels have emerged as Albania’s top exports in the past couple of years, overcoming the traditional garment and footwear products which this year are back on track with a 30 percent growth rate.
Meanwhile, imports continued growing in the first half of this year, a situation reflecting a recovery in domestic consumption but negatively contributing to the country’s trade balance.
Imports of ‘machinery, equipment and spare parts,’ an indicator also measuring private investments, was up by 8.5 percent in the first half of this year, signaling a recovery in the Albanian economy which is expected to grow by 2 percent this year after registering its poorest growth in more than a decade in 2013.
Albania’s exports grew by 15.6 percent in 2013, registering growth rates for the fourth consecutive year after a slight shrink in onset of the global crisis in 2009.
While the Albanian economy has considerably slowed down since the outbreak of the global economic crisis in late 2008, the good news is that exports have more than doubled in the past five years and the country has become less dependent on imports. The situation has considerably improved Albania’s trade gap although the slowdown in imports in 2012 and 2013 has been linked to a shrink in consumption and investments.
Data published by the country’s state Institute of Statistics show the export/import coverage ratio rose to 48.1 percent in 2013 up from a mere 24.4 percent in 2009 and an average of 24 percent from 2000 to 2008.
Trade exchanges with Italy, Greece recover
Albania increased trade exchanges with both Italy and Greece in the first half of this year as the neighbouring countries which are the top two trade partners are escaping recession. INSTAT data shows exports to Italy rose by 26 percent to around 71 billion lek (Euro 497 million) in the first half of this year, accounting for 70 percent of total exports.
Exports to Greece also rose by 21 percent, but accounted for only 4.5 percent of the total. Greece maintains its second top trade partner position only thanks to imports which account for around 15 percent of the total.
Six years after the onset of the global financial crisis, exchanges with top trade partner Italy have remained unaffected but suffered a sharp shrink with neighbouring Greece which is expected to overcome its six-year recession only this year. The same has also happened with foreign direct investment from the two top trade partners with Italy strengthening its position and Greece losing its top investor position which it managed to hold until 2010.
Albania’s top two trade partners Italy and Greece are expected to register positive growth rates in 2014, escaping their recession period, according to forecasts by Eurostat, the statistical office of the European Union, which is a positive signal for the Albanian economy with close links to this countries through trade exchanges, investments and remittances.
Italy, Albania’s top trade partner which is the destination of more than 50 percent of Albania’s exports, is expected to register positive growth rate of 0.7 percent in 2014 after being in recession in 2012 and 2013.
Meanwhile, Greece which still remains Albania’s second top trade partner is also expected to register positive growth rate of 0.6 percent in 2014 overcoming six consecutive years of recession, which also considerably affected trade exchanges with Albania.
The two neighbouring countries account for around 50 percent of Albania’s trade exchange, being the top investors in Albania and the overwhelming source of migrant remittances.
Eurostat data show Greece shrank by 3.9 percent in 2013 while the Italian economy was down by 1.9 percent.
Italy, the destination of more than 50 percent of Albanian exports, registered a 2.4 percent shrink in 2012, after modest positive growth rates in 2010 and 2011 and recession in 2008 and 2009.
Meanwhile, Greece, which currently remains Albania’ second most important trade partner only for imports, has been in its worst ever recession since 2008.
