Minerals and fuels were the only products keeping crisis-hit Albanian exports growing at a moderate pace in 2012, at a time when the “garment and footwear” industry, until recently the top exporting industry, suffered a slight shrink
TIRANA, Jan. 29 – Affected by sluggish demand from crisis-hit EU partners, the destination of three-quarters of total exports, Albania’s export growth rate halved in 2012 while imports shrank unveiling the poor domestic consumption, which is the key driver of economic growth. However, Albania’s trade deficit narrowed and the export-import coverage ratio rose to 40.3 percent in 2012 up from 36 percent in 2011 and 24 percent in 2010, according to data published by the state Institute of Statistics (INSTAT). Statistics show Albanian exports rose by 8.2 percent in 2012, down from 20 percent in 2011. In 2012, Albania exported 213 billion lek of goods (Euro 1.5 billion), up from 197 billion lek in 2011.
Minerals and fuels were the only products keeping crisis-hit Albanian exports growing at a moderate pace in 2012. At a time when the “garment and footwear” industry, until recently the top exporting industry, and the “construction material and metals” are suffering a shrink in external demand, a 29 percent increase in sales of “minerals, fuels and electricity” in 2012 kept Albanian exports growing. The contribution is attributed to minerals and fuels as electricity exports in 2012 were negligible due to falling domestic hydroelectricity generation unable to meet even the country’s needs. At 76 billion lek (Euro 535 million) in 2012, exports of “minerals, fuels and electricity” ranked on top of the list, registering a 28.5 percent increase year-on-year. Chromium and copper are the most exported products in this category.
The garment and footwear sector, one of the top employers and exporters in the past few years, continues suffering crisis impacts as demand from top EU partners falls. INSTAT data show textile and footwear exports failed to recover, shrinking by 3.2 percent to 60 billion lek in 2012. The garment and footwear industry, which employs more than 60,000 people now accounts for 28 percent of total exports, down from more than 30 percent in the previous years. Under the new fiscal package approved by Parliament, starting from January 2013 the 20 percent VAT on imported machinery and equipment has been lifted only for investments of Lek 50 mln (Euro 351,000) or more. However, Prime Minister Berisha has pledged the garment and footwear industry, the country’s top exporter, which this year has been suffering crisis impacts from lower demand by crisis hit EU partners Italy and Greece, will have VAT on machinery imports removed for all kinds of purchases.
“Construction materials and metals” ranked the third most important exports with 40 billion lek in 2012, down 3.7 percent compared to 2011.
Exports in 2009-2011
Bank of Albania data available in Euro show exports continued to positively perform in 2011 despite the crisis-hit EU member countries, which are the destination of 70 percent of Albania’s exports. Fuelled by ongoing rising demand from Italy, Albanian exports continued registering double-digit growth for the second year in a row after the shrink in the outbreak of the global crisis in 2009. Central bank data show Albania’s exports rose by 19.7 percent to Euro 1.4 billion in 2011, compared to an annual growth rate of 56 percent in 2010 and an 18 percent shrink in 2009. Despite suffering severe debt crisis and its economy slowing down, Italy continued remaining Albania’s top trade partner accounting for 53 percent of exports and 30 percent of imports. Detailed INSTAT data show the fa谮 industry, producing garment and footwear products with imported raw material, continued remaining the top export performer also thanks to Arab spring turmoil and the removal of customs fees.
Top trade partners
Exports to top trade partner Italy, the destination of more than half of Albanian exports, have also been affected by the crisis there, with their growth rate slowing down. In 2012, Albania exported around 108 billion Lek of goods to Italy, up only 3.6 percent compared 2011, when exports grew by 28 percent year-on-year.
Meanwhile, exports to Greece, the country’s second most important trade partner have been severely affected by the crisis in the neighbouring country. Once the second destination of Albanian exports, Greece now ranks only the fifth most important partner with exports in 2012 at 9.4 billion lek, down 5.2 percent compared to 2011. Greece is the second most important partner for imports with trade exchanges accounting for 12.5 percent of the total.
Crisis-hit Spain surprisingly ranks the second most important destination of exports in 2012 with around 20 billion lek, up 180 percent compared 2011. Kosovo ranked the third most important partner with 17.4 billion lek. Albanian exports to neighbouring Kosovo registered a 18.5 percent increase in 2012 despite trade disputes on potato and cement reference prices.
Imports shrink
While exports continue their moderate growth, the slight shrink in imports reconfirms the slowdown in domestic consumption in a net-import country such as Albania. Total imports in 2012 dropped by 3 percent to 528 billion lek, according to INSTAT data. The sluggish domestic consumption is also indirectly shown by the poor performance of the value added tax. Businesses’ hesitation about making new investments is also confirmed by imports of machinery and equipment which during the whole of 2012 dropped by 11 percent to 97 billion lek. The import list is topped by ‘minerals fuels and electricity’ which rose by 8 percent to 110 billion lek. Imports of food, beverages and tobacco rose by only 1.3 percent to 93 billion lek in 2012.
Lower imports contributed to the trade deficit dropping from 347 billion lek in 2011 to
315 billion lek in 2012.
Italy accounts for 30 percent of total imports followed by Greece and Germany with 9 percent and 6 percent respectively.
