Export, Trade Deficit Rise Again

For the first four months of 2008, Albanian exports increased 15 percent more compared to the same period a year ago. According to the Albanian Customs Office, almost ALL 38 milliard in goods left Albania between January and April, about ALL 5.5 milliard more than during the period between the same months last year.
Out of all trade partnering countries, Italy and Greece received almost three quarters of Albanian exports. Among the most active industries were clothing and footwear, construction materials and metals, minerals, fuels, and electricity, together comprising 78 percent of all Albanian exports.
For the past three years, customs taxes have been reduced due to bilateral trade agreements between Albania and the EU. The cut in taxes, facilitated by the SAA signed by Albania in June 2006, anticipated a bigger flow of trade between Albania and the Union. It was expected to boost local production, which was then to be exported to EU member countries.
However, reports say that only a quarter of all exports, by volume, are fully produced in the country. Most exported goods are first imported into Albania, reprocessed and then re-exported, or produced in Albania using foreign raw materials.
The high rate of reprocessed goods is mainly due to the relatively cheap labor force in Albania and the low tax rate. Foreign investors tend to profit from these factors, and by bringing into the country their own raw materials, and succeed in lowering production costs of their goods, which are to be sold in the European market.
On the other hand, the tax cut has reduced the costs of all imports from the EU, which has notably boosted imports into the country. For the first four months, Albania imported ALL 133.5 milliard, or more than 13 percent, compared to the same period last year. The low internal production and the high import of goods has caused a trade deficit of almost ALL 96 milliard for the first four months alone, a figure which seems to exceed, by 8 milliards, the ALL 280 milliard deficit in 2007.(Tirana Times Staff)