TIRANA, Jan. 18 – Albania’s exports returned to double-digit growth rates in 2017 following sluggish performance since the mid-2014 slump in commodity prices paralyzing the country’s poorly diversified exports, according to a report by state-run statistical institute, INSTAT.
However, it was not the pickup in oil and mineral prices that led Albania’s exports to 12 percent increase in 2017, but the garment and footwear industry producing the country’s traditional top exports and the “construction material and metal industry,” which emerged as the country’s second largest exporter for the first time since 2009 when the global economic crisis had its first spillover effects on Albania.
The construction material and metal industry, mainly relying on cement and brick exports as well as steel, also revived thanks to the resumption of production by the country’s largest steelmaker, Turkish-run Kurum which in early 2016 initiated bankruptcy proceedings. Exports of this group rose by about 38 percent to 43.8 billion lek (€323 million), overtaking “minerals, fuel and electricity” by a small amount. “Minerals, fuel and electricity” were negatively affected by the majority of domestic oil production being sold to a local refiner that suspended operations in late 2017, leaving some 1,200 workers jobless, and a prolonged drought paralyzing the country’s domestic electricity production and exports.
The garment and footwear sectors, Albania’s traditionally top exporting industry in the past two decades, saw its exports increase by an annual 10 percent to 117 billion lek (€866 million) in 2017, says INSTAT.
Employing about 100,000 people and relying on cheap labor costs, the sector is largely dependent on demand from top trading partner Italy and remains mostly involved in cut-make-trim production with few companies having created their own in-house brands.
Albania’s exports heavily rely on garment and footwear manufacturing as well as oil and base metals whose share in the country’s exports is estimated at two-thirds, making them vulnerable to international headwinds. The IMF has warned Albania’s undiversified export markets and the concentration of its exports in low value-added sectors may be an impediment to future growth.
The country’s exports registered modest growth of 0.1 percent in 2016 following a 5 percent oil-price affected decline in 2015. The last time exports registered a double-digit growth was in 2013 when oil prices were at their peak and crude oil topped Albania’s exports.
Imports also registered a significant increase in 2017 fuelled by costly electricity imports of about €200 million in the second half of 2017 as the country’s wholly hydro-dependent domestic electricity generation was paralyzed following one of the worst droughts in decades.
Imports of ‘machinery, equipment and spare parts,’ the country’s top imports, also serving as an indicator of domestic investment, grew by a modest 2 percent to about 134 billion lek (€989 million) as imports of steel pipes for the major Albania section of the Trans Adriatic Pipeline project bringing Caspian gas to Europe ended their contribution in mid-2017.
Albania is a net importer with exports covering only about 44 percent of what the country imports.
With imports increasing by 8 percent to 626 billion lek (€4.6 billion), Albania’s trade gap widened by 5.2 percent to 353 billion lek (€2.6 billion) in 2017.
Trade exchanges with the EU accounted for more than two-thirds of the total in 2017 with Italy, Greece, Germany and China as the country’s main trading partner.
Trade exchanges with Italy accounted for 36 percent of the total, compared to 6.8 percent with Greece and Germany and 6.4 percent with China, according to INSTAT.
Recessions in Italy and Greece, Albania’s top trading partners and the hosts of about 1 million migrants, have had a huge impact on the Albanian economy in terms of trade exchanges, remittances, and foreign investment flows for several consecutive years following the 2008 global financial crisis.
