By Rexhep Meidani
These days I have carefully kept track of the data processed at a global level on the “Universal Currency Converter.” Parallel with the recuperation of the dollar against the Euro, what has made the biggest impression on me there is the exchange rate of the Euro and Dollar against the lek. Moreover, despite minor zigzags the Euro is fluctuating between 126-127 lek in value, the dollar is gradually rising to the value of 100 lek. The question that arises today is: Are these exchange rates temporary, or is this an emerging trend, as dangerous as it is predictable, of the devaluation of our currency? Or do they reflect the impossibility of this currency to resist, up against a high strain and cost, within a local, monetary policy, in the context of the global financial crisis? We can only hope that the decline in value of these last few days will remain an isolated case that can be overcome, and also at minimum cost, without serious influences or consequences, otherwise the Albanian consumer could be exposed to new and even greater hardships.
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Generally speaking, within a relatively long period of time, an economic cycle could mirror acknowledged phases such as economic recession, minimal economies, revival and economic expansion, and finally, economic boom. Without enlarging on the “theoretical” analyses of these stages, in the conditions of Albania, in the context of policy-making (particularly by the executive structure, the institutions responsible for implementing the financial and monetary policies), principle care must be focused, on the phenomenon of the economic recession. This is also because, in essence, the Albanian economy, irrespective of its own growths, is impregnated and develops in near on conditions of crisis! Today’s concern makes this outlook even more tangible. Even more so, when even more aggravated situations can be seen all over the world, in the economically developed countries and those with weaker economies. Nonetheless, it is comfortably predictable, and highly likely, that there will be a gradual process of transformation from recession to a minimal economyš
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As is acknowledged, from a technical viewpoint, economic recession is a decline or slump over two consecutive quarters of the GDP. During a recession, several general features can be clearly discerned, such as: growth rates of the GDP slacken, or become negative; output of the manufacturing companies falls or reduce reserves; unemployment grows, inflation falls; investment levels are reduced; companies suffer from a decrease of profits, or declining values of the returns on the planned investments, excess (parasitical) costs.
In Albanian conditions, apart from the above problems, substantial losses are being recorded by many commercial activities, hard hit by the fluctuations and even the “vaporization’ of exchange rates. Earlier purchases in dollars and the later sales of these commodities on the Albanian market (in lek) have generated a great deal of concern, both for wholesale and retail trade. In general, viewed from this angle, even though a great deal of economic data has still not been classified as typical of a recession process, these figures do say something. Declared government figures of a 9.9 per cent GDP growth during the third quarter, in comparison with the recently declared 6 per cent, is evidence of the above. This even speaks of a technical recession, irrespective of the fact that the “commanded” figures of INSTAT could, without too much trouble, exceed the figures of the memos sent so far by the IMF.
The situation becomes even easier to read when it is comprehended that many private businesses have gone bankrupt or are heading that way with each passing day. Many shops are being ‘affected’ or are losing more and more customers. Exceptionally devastating and suspicious too, are the huge fires that have recently swept through several major businesses in the country, causing irrevocable havoc. Many other companies are suffering today from steep declines in profits, they have slashed production, reduced reserves, and, moreover, without even attempting to raise investment levels a single millimeter. Today, the company that produces electric power (from hydropower stations), which is not connected to the financial crisis, but which is totally reliant on the high levels of rainfall of these past months, is an exception. Apart from this, there is further tangible evidence, although this is not made public, such as high unemployment (despite the fact that in this lead-up period to general elections, different institutions are claiming that there is a need for increased personnel); a decline of inflation (which, reflected in the monetary policy, is observed as a growing obligation to lower interest rates on deposits), and all of these factors are common co-travelers of recession. Is this not sufficient information for the government or the Bank of Albania to be on their feet in alarm?
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In a situation of full depression or of a minimal economy, the recession indices mentioned above, worsen. Unemployment soars, investments drop to record lows, consumer purchases drastically diminish (especially purchases of long duration commodities, expenditure for holidays, restaurants, etc), savings capacities drop, low inflation, etc. In an analysis of some of these indices, in particular those linked with consumption, the concern increases. Even worse, is the fact that in such deteriorated conditions, everyone turns a blind eye to the situation and illicit revenue is brought fully into the game. As the year wears on an even greater problem is expected to arise as the revenue into Albania from the honest labour of Albanian emigrants dwindles, or, in general, any extra revenue accumulated from long or short term export of labour power to neighbouring countries. “Executive” hopes for technological investments, a long way off European environmental standards, are all without perspective in the face of the growing severity of EU directives in this direction. Above all, these investments do not solve any crisis, and what’s more they are projects of irresponsible investments, with very little in common with long-term national interests, as we have witnessed with many other actions, irrespective of the fact that they have been marketed in highly demagogical, populist language, bordering even on “nationalist” pathos.
What is sought today is the urgent compilation of an anti-crisis packet, its approval in parliament with the broad consensus of the political forces; not pandering partisan interests so that it can be waved as an electoral asset, but a packet at the service of the citizen, a means of coping with the consequences of the crisis more easily and with minimal hardship.
