At 62 billion lek in the first ten months of this year, exports of “minerals, fuels and electricity” ranked on top of the list, registering a 29.4 percent growth rate year-on-year
TIRANA, Nov. 27 – Minerals and fuels are the only products keeping crisis-hit Albanian exports growing at a moderate pace during this year. At a time when the ‘garment and footwear’ industry, until recently the top exporting industry, and the ‘construction material and metals’ are suffering a shrink in external demand, a 30 percent increase in sales of “minerals, fuels and electricity” in the first ten months of this year keeps Albanian exports growing. The contribution is attributed to minerals and fuels as electricity exports during this year have been negligible due to falling domestic power generation unable to meet even the country’s needs. At 62 billion lek (Euro 436 million) in the first ten months of this year, exports of “minerals, fuels and electricity” ranked on top of the list, registering a 29.4 percent growth rate year-on-year. Chromium and copper are the most exported products in this category.
The garment and footwear sector, one of the top employers and exporters in the past few years, continues suffering crisis impacts as demand from top EU partners falls. INSTAT data show textile and footwear exports failed to recover, shrinking by 5 percent to 51.8 billion lek for the first ten months of this year. The garment and footwear industry, which employs around 100,000 people now accounts for 30 percent of total exports. Government has proposed that the 20 percent VAT on imported machinery and equipment will be lifted only for investments of Lek 50 mln (Euro 351,000) or more. However, the garment and footwear industry, the country’s top exporter, which this year has been suffering crisis impacts from lower demand by crisis hit EU partners Italy and Greece, will have VAT on machinery imports removed for all kinds of purchases.
‘Construction materials and metals’ rank the third most important exports with 33.2 billion lek in the first ten months of this year, down 5.6 percent compared to the same period last year.
Total Albanian exports during the first ten months of this year grew by 7.3 percent to 175.6 billion lek.
While exports continue their moderate growth, the slight shrink in imports reconfirms the slowdown in domestic consumption in a net-import country such as Albania. The sluggish domestic consumption is also indirectly shown by the poor performance of the value added tax. Businesses’ hesitation about making new investments is also confirmed by imports of machinery and equipment which during the first ten months of this year dropped by 7.5 percent to 80 billion lek. The import list is topped by ‘minerals fuels and electricity’ at 91 billion lek. Imports of food, beverages and tobacco rose by only 2.3 percent to 78 billion lek in January-October 2012.
Exports to top trade partner Italy, the destination of more than half of Albanian exports, have also been affected by the crisis there, with their growth rate slowing down. In the first ten months of 2012, Albania exported around 89 billion Lek of goods to Italy, up 5 percent compared to the same period last year.
Meanwhile, exports to Greece, the country’s second most important trade partner have been severely affected by the crisis in the neighbouring country. Once the second destination of Albanian exports, Greece now ranks only the fifth most important country with exports in the first ten months of this year at 8 billion lek, down 1.5 percent compared to the same period last year. Greece is the second most important partner for imports with trade exchanges accounting for 12.5 percent of the total.
Spain surprisingly ranks the second most important destination of exports for the ten months of 2012 with around 15.5 billion lek followed by Kosovo with 14.7 billion lek. Albanian exports to neighbouring Kosovo have registered a 23 percent increase despite trade disputes on reference prices during this year.
“Albania’s strong trade, investment and remittance ties to Greece and Italy are likely to continue to hold back growth in the coming year, while public debt is close to the statutory limit of 60 per cent of GDP, limiting the room for fiscal manoeuvre,” say international financial institutions, which expect the Albanian economy to grow between 0.5 to 1 percent.
