The study, which surveyed more than 1,200 families during this year, showed Albanian households spent 74 percent of remittances on food products
TIRANA, July 18 – Migrant remittances, a vital source of income for thousands of families in Albania, have dropped considerably during the past five years– affecting the beneficiaries’ consumption and living conditions. A new study conducted by the Agenda Institute shows more than half of surveyed families in Albania report receiving less in remittances during the past five years. The study, which surveyed more than 1,200 families during this year, showed Albanian households spent 74 percent of remittances on food products.
Some 60 percent of beneficiary families are reported to have cut down on consumption as Albanian migrants face the crisis effects in their host countries, especially Greece and Italy where more than 1 million Albanian migrants live and work.
The study showed remittances are vital for around 60 percent of families with monthly revenues up to 300 dollars.
Albanian migrants sent an average of 1,400 euros per year to help their families with food, clothes and healthcare expenditure.
Milva Ekonomi, the director of the Agenda Institute recommends cutting the value added tax (VAT) on food articles as one of the measures to help Albanian families. Promoting employment through vocational education and drafting policies to attract more foreign direct investment and increase exports are some other measures recommended by the Agenda Institute.
The study showed around 80 percent of remittances come from neighboring Greece and Italy and 8 percent from the United States.
Official data show migrant remittances in 2010 registered their lowest level of the past seven years. Central bank data show remittances dropped by 12 percent to 690 million Euros in 2010, down from 781 million Euros in 2009 and 774 million Euros in 2004.
Migrant remittances registered their highest level in 2007 at 952 million Euros, before declining ahead of the global crisis in 2008 and 2009, when they fell to 833 and 781 million Euros respectively. A recent study carried out by the Bank of Albania has found that remittances, one of the main sources of income for thousands of families in Albania, are very sensitive to the economic activity in the Eurozone, where most Albanian immigrants live and work. Remittances also constitute a critical driver of Albania’s domestic demand. Estimates suggest that for the overall economy (excluding agriculture) a 10 percent decline in remittances would lead to a 3.6 percent reduction in domestic demand, as provided by the index of sales. The sectors affected the most by remittances are construction, services and food, which are also the key contributors to Albania’s GDP. It is believed that the sharp contraction in construction has partly been a result of declining inflows from workers abroad. A recent survey conducted by the EBRD and the World Bank also confirmed the economic crisis has affected a majority of households in Albania. Around 60 per cent of respondents say that their households have been significantly affected, compared to a transition region average of about 50 per cent, says the report published this week which surveyed almost 39,000 households in 34 countries. “This is despite the fact that Albania was one of the few countries to maintain positive growth during the crisis. There is little variation across age groups, although the upper-income category have been less affected than those lower down the income scale,” added the report. The drop in consumption and the consumers’ saving trend is also confirmed by latest INSTAT data showing that retail sales in the first quarter of 2011 dropped by 5.9 percent year-on-year and 12.3 percent compared to the final quarter of 2010.
