TIRANA, Oct. 19 – Business confidence registered a considerable recovery in the third quarter of the year, but the capacity utilization rate in the key industries remains far below its potential and even lower than its historical average in some cases.
Business confidence grew in all industry, construction, services and trade sectors in the third quarter of the year, while the capacity utilization rate, measuring the proportion of potential economic output that is actually realized, stood at 78 percent in the best case for the key services sector.
The capacity utilization rate in the industry sector whose extractive branch is suffering a sharp contraction due to a slump in international oil and mineral prices slightly recovered to 77 percent in the third quarter of the year, standing 4.8 percentage points above its historical average.
The industry sector, accounting for 14.2 percent of the GDP, has seen a boost this year due to 20 percent increase in garment and footwear exports in the first eight months of this year. The garment and footwear sector is one of the country’s main private sector employers with an estimated 100,000 people and produces the country’s key exports.
The capacity utilization rate in services and trade sectors accounting for 50 percent of the GDP slightly recovered to an average of 76 percent, but stood 3.6 percentage points below its historical average for the trade sector.
In the long-ailing construction sector, the capacity utilization rate stands at 69.3 percent, about 4.8 percentage points above its historical average.
By comparison, the capacity utilization rate in the manufacturing industry at the EU 28 slightly recovered to 81.8 percent in the third quarter of 2016, but was at 76.4 percent in Italy, Albania’s main trading partner accounting for 50 percent of total exports and 30 percent of imports, according to Eurostat, the statistical office of the European Union.
Italy, the host of some 500,000 Albanian migrants 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 capacity utilization rate in neighboring Greece which is struggling to recover from its six-year recession, was at 67.4 percent.
Lending standards on big enterprises tightened in the third quarter of the year but remained unchanged for SMEs as non-performing loans rose to 21.5 percent.
Credit to businesses contracted by 1 percent in the first eight months of this year, also affected by the continued write-off of bad debt from banks’ balance sheets, statistically keeping lending at negative growth rates.
