TIRANA, Sept. 20 – Albania’s trade exchanges with key trading partners Italy, Greece and China recovered in the first seven months of this year, but suffered a setback with Kosovo and Turkey where the country’s exports faced a sharp cut, according to state statistical institute, INSTAT.
Affected by a sharp decline in international oil and mineral prices, Albania’s poorly diversified exports have suffered in the past couple of years and failed to return to positive growth rates as low commodity prices have triggered a slowdown in the extractive industries with negative effects on employment, exports and government revenue.
Trade exchanges with Italy, the country’s top trading partner accounting for 50 percent of total exports and 30 percent of imports, continued recovering in the first seven months of this year fueled by higher demand for both exports and imports.
Meanwhile, trade exchanges with neighboring Greece, the country’s traditional second largest trading partner, marked a turning point in January-July with both exports and imports increasing.
Neighboring Italy and Greece are the hosts of some 1 million Albanian migrants and the major source of remittances, which although undergoing a sharp decline in the past few years, continue playing an important role on the Albanian economy.
Italy, Albania’s neighbor across the Adriatic showed modest signs of recovery in the first half of this year, with its economy growing by about 1 percent following a three-year recession ending in 2014.
Meanwhile, the Greek economy contracted by about 1 percent in the first half of this year following a six-year recession ending in 2013 that shrank the neighboring country’s economy by about a quarter.
Trade exchanges with China, which last year emerged as the country’s second largest trading partner, have also increased during this year, but exports to the emerging superpower suffered a 28 percent decline in the first seven months of this year, affected by a sharp decline in prices of chromium, Albania’s key export to China.
China is about to emerge as a top foreign investor after preliminary deals by Chinese companies to acquire Bankers Petroleum oil company and the country’s sole international airport earlier this year.
Trade exchanges with Kosovo and Turkey this year have been affected by a sharp cut in metal-oriented exports after Turkish-run Kurum steel plant in Elbasan, one of the country’s biggest enterprises, initiated bankruptcy proceedings due to a sharp cut in base metal prices also affecting its parent company in Turkey.
Exports to neighboring Kosovo which has emerged as Albania’s second largest trading partner for exports following the construction of the Highway of Nation sharply cutting travel time between the two countries, suffered a sharp 33 percent drop in January-July 2016 apparently affected by a slump in international commodity prices. Base metals and minerals account for three quarters of Albania’s exports to Kosovo.
Exports to Turkey, whose overwhelming 90 percent are dominated by base metals and minerals, have even suffered a sharper decline dropping by six times to a mere Euro 6.5 million in the first seven months of this year.
Albania’s exports suffered a 6.6 percent decline in January-July 2016 affected by a slump in commodity prices and the suspension of work in Kurum steelmaker which is struggling to escape bankruptcy.
The poor diversification of Albania’s exports heavily relying on oil and base metals whose prices are currently at a record low is expected to have another negative impact on the country’s exports which dropped by 5 percent in 2015, returning to negative growth rates after a contraction in 2009 soon after the onset of the global financial crisis.
Albania poorly diversified and low value-added exports could face headwinds over the medium term due to oil price shocks and tougher competition in the key garment and footwear from new Asian frontier markets, warns the IMF in a recent country report.
Albania is a net importer with exports covering only about half of imports.
