Central bank governor Ardian Fullani says exports are expected to have a lower impact in Albania’s 2012 because of the crisis in Italy and Greece, Albania’s top trade partners.
TIRANA, April 25 – Exports, which in 2011 were the key driver of Albania’s moderate economic growth, and have been set as key pillar even in this year’s growth, failed to recover in the first quarter of 2012 due to sluggish demand from crisis-hit EU partners, signaling the Albanian economy will face harsher impacts in 2012. Bank of Albania data available in Euro show exports dropped by 12 percent to 325 million euros in the first quarter of this year compared to the same period last year. Data show exports had not recorded a shrink in the first quarter since 2009 when global crisis impacts were felt even in the Albanian economy.
However, the good news is that after both in January and February 2012 exports registered lower annual rates, in March 2012 they slightly rose to 127 million euros compared to 121 million euros in March 2011.
Exports to crisis-hit Italy and Greece, Albania’s top trade partners also maintained their growing trend. Exports to Italy in the first quarter of 2012 rose by 18 million euros to 186 million euros and accounted for 57 percent of total exports. Exports to Greece also slightly rose by 2 million euros to 18 million euros. Meanwhile, imports rose by only 21 million euros to Euro 855 in the first quarter of 2012, confirming the sluggish domestic demand, which is the key driver of the Albanian economy.
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.
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.
Speaking this week after the Bank of Albania decided to keep the key interest rate unchanged at 4.25 percent, governor Ardian Fullani said exports are expected to have a lower impact on Albania’s 2012 growth because of the crisis in Italy and Greece, Albania’s top trade partners.
“2012 will be under the influence of unfavorable developments in the global economy, which will also condition the Albanian economy. External demand is expected to have a lower contribution this year, influenced by economic slowdown in partner countries,” said Fullani, adding that domestic consumption performance will be decisive for Albania’s growth.
The Albanian government’s projection of the 2012 growth being stimulated by domestic private consumption and investments, on a falling trend since 2011 remains an overoptimistic scenario little likely to achieve the target for 4.3 percent economic growth rate at a time when the IMF says Albania will hardly manage to escape recession.
“In 2012, economic growth is expected to arise mainly from domestic private consumption and investment, while foreign demand is projected to have a lower contribution. Moderation in the pace of government spending will also lower its contribution to GDP,” says the Finance Ministry in its latest review of the 2012 economic and fiscal program. The projections run even counter to findings of state institutions such as INSTAT and the Bank of Albania which show that retail sales and business and consumer confidence remain pessimistic.
