Foreign direct investment in the first three quarters of this year rose to 712 million euros, up from 562 million euros during the same period a year ago, registering a record high for the first three quarters of a year
TIRANA, Dec. 10 – With domestic consumption at sluggish rates, exports and foreign direct investment have emerged as the key drivers of Albania’s moderate growth during this year when the economy is expected to growth at around 1.2 percent, the lowest rate in the past 15 years.
Both exports and FDI grew by double digits in the first three quarters of this year, while domestic consumption remained sluggish as indirectly unveiled by the performance of the value added tax.
Meanwhile, remittances and tourism revenue continue their downward trend affected by the Eurozone crisis.
The Albanian government now expected the economy to grow by 1.2 percent for 2013 and the public debt to climb to 69 percent of the GDP on deteriorating public finances during this electoral year.
FDI
FDI, which in 2012 ranked Albania as the second largest recipient in South-East Europe, continued positively performing in the first three quarters of this year when it rose by 27 percent. FDI in the first three quarters of this year rose to 712 million euros, up from 562 million euros during the same period a year ago, registering a record high for the first three quarters of a year, according to Bank of Albania data. The FDI was boosted by privatization and investments in hydropower plants.
A UN report shows Albania attracted USD 957 million in foreign direct investment in 2012, down 7.6 percent compared to 2011, but remained the second largest FDI recipient among six transition economies of the South-East Europe after Croatia.
FDI stagnated in 2012 when it registered Euro 745 million, exactly the same level compared to 2011 but lower compared to the peak inflow of Euro 793 million in 2010, which for the first time made Albania one of the largest FDI recipients in South East Europe.
Central bank data total FDI stock almost doubled in the past few years climbing from Euro 1.8 billion in 2007 to Euro 3 billion in 2011.
Migrant remittances
As crisis impacts in Italy and Greece escalate, Albanian migrants there striving to make ends meet, continue sending less money to their households in Albania. Migrant remittances during the first three quarters of this year dropped by 28 percent to 347 million euros, down from 483 million euros in the first three quarters of last year.
On a falling trend since the onset of the global financial crisis in 2008, migrant remittances slightly increased to 675 million euros in 2012, up Euro 10 million compared to 2011, but were significantly lower compared to their peak rate of Euro 952 million in 2007.
Migrant remittances whose overwhelming majority comes from neighboring Greece and Italy being a vital source for thousands of families in Albania, dropped by 30 percent from 2007 to 2012.
Back in 2007, just before the outbreak of the global crisis remittances accounted for 12.5 percent of the GDP, compared to 6 to 7 percent currently.
Italy and Greece, where more than 1 million Albanian migrants live and work, account for around 84 percent of remittances to Albania, Open Data Albania research centre says in a report referring to World Bank data
Tourism revenue
Albania continues earning less from the tourism sector despite authorities reporting rising number of visitors. Meanwhile, spending on trips abroad registered an increase in the first three quarters of the year.
Tourism revenue during the first three quarters of this year reached 760 million euros, down from 876 million euros during the first three quarters of last year, registering a decrease of 14 percent, according to central bank data.
Tourism revenue declined for the third year in a row in 2012 despite government reporting a significant boom in the number of tourists visiting Albania. Central bank data show tourism revenue in 2012 slightly dropped to 1.145 billion Euros, down Euro 24 million or 2 percent compared to 2011. Affected by crisis, tourism revenues have been on a downward trend since 2009 when it registered its peak rate of Euro 1.3 billion.
Ethnic Albanians from Kosovo, Macedonia, Montenegro account for three-fifths of foreign tourists visiting Albania, according to a report published by the Tourism Ministry.
Despite crisis impacts, Albanians have increased spending on trips abroad during this year. Spending on trips abroad rose to 801 million euros in the first three quarters of 2013, up from 747 million euros during the same period last year.
Central bank data show Albanians spent 1 billion euros in trips abroad in 2012, down from Euro 1.169 billion in 2011 and Euro 1.227 billion in 2010.
Transfer of profits
During the first three quarters of 2013, foreign companies transferred 117 million euros, down from 217 million euros in the first three quarters of 2012. Since the onset of the global financial crisis, foreign companies operating in Albania have considerably increased the transfer of profits to their parent companies. Bank of Albania data published in the current account balance sheet show some 264 million euros flowed out of Albania in transfer of profits by foreign companies operating in Albania in 2012, up 41 percent compared to last year.
In 2011, foreign companies transferred 187 million euros, down from 365 million euros in 2010 and 401 million euros in 2009, which is the peak rate of transfer of profits.
“Under these conditions the increase in transfer of profits implies that foreign companies are reinvesting their profits in Albania less and sending back more in cash profits to their parent companies affected by the debt crisis,” experts say.
The transfer of profits from 2004 to 2009 ranged from Euro 23 million to euro 64 million annually.
