Greek Crisis Affects Albania

TIRANA, March 24 – The consequences of the severe economic crisis that neighboring Greece is facing are also being felt in Albania where exports and immigrant remittances have considerably fallen and hundreds of jobless migrants are returning home.
A number of Albanian clothing businesses depending on sales in Greece, mainly in the southern regions of Gjirokastra and Korca, have also closed down or cut down their activity leaving hundreds of workers jobless. Businesses in southern Albania, where the majority of immigrants in Greece come from, have also reported drops in sales because of the falling remittances.
The effects of the Greek crisis in Albania were also admitted on Wednesday by Finance Minister Ridvan Bode who warned that financial problems in neighboring countries, especially Greece, were a major concern for Albania because of the high level of trade exchange with them.
“The financial system in our region and elsewhere is not an isolated system which operates with separate markets and rules, and moreover in Albania where the majority of banks are owned by foreign investors,” said Bode, warning of the risks of daughter-banks in Albania. Greek-owned banks in Albania comprise 25 per cent of the country’s banking assets and hold 38 per cent of the loans.
Experts say Albania will be the hardest hit country by the crisis because of the size of Greek investments and the big Albanian migrant community in Greece, whose remittances are a major source of revenue for Albanian families.
Albania has more than 600,000 immigrants in Greece, who make up 10 percent of the Greece’s total workforce.
Recent Bank of Albania statistics show immigrant remittances in 2009 registered their lowest level since 2005, dropping to 799 million euros or 6.5 percent less than in 2008. Data show Albanian immigrants in 2009 sent 54 million euros less in remittances compared to 2008 and 173 million euros less than in 2007.
The main cause of the sharp drop in remittances was the increase in the unemployment rate mainly in crisis-hit Greece and Italy where more than one million Albanian immigrants live and work.
Meanwhile, Albanian exports to Greece continue dropping as the neighboring country is plunged into its worst financial crisis in decades. Data published by the Bank of Albania show Albanian exports to Greece underwent a further decrease last January despite the general rising trend of the country’s exports. Albania exported 3.84 million euros of goods to Greece in January 2010, or 5 percent less than in January 2009 when exports reached Euro 4.04 million.
Experts say the real situation of exports is worse than shown in statistics because of the depreciation of Albania’s national currency Lek, which has fallen in value by 12 percent against the Euro, making Albanian exports seem larger than they really are.
Greece controls almost 27% of total foreign investment in Albania and is ranked first in terms of invested capital, which exceeds $800 million.
There are almost 270 Greek, or Greek-controlled, enterprises, mainly activate in telecommunications, commercial banking, contracting and construction, tobacco trading, oil and oil products trading and distribution, textiles, foods, apparel and footwear.