TIRANA, June 29 – A slowdown in retail sales and the turnover index has reconfirmed the poor progress the Albanian economy is estimated to have made in the first quarter of this year when the southern part of the country was severely affected by floods.
Latest data published by the country’s state statistical institute, INSTAT, ahead of the GDP publication for the first quarter of this year, shows retail sales slowed down to 4.7 percent in January-March 2015 affected by a decline in oil sales and electrical household appliances and furniture. Back in the first quarter of 2014 when the economy grew by 1.64 percent, retail sales were up by 5.7 percent year-on-year.
Short-term business statistics show the turnover index in the key industry, construction and services sectors also slowed down to 2.3 percent in the first quarter of this year affected by a sharp 30 percent cut in the extractive industry as international oil and base metal prices stand at a record low having a negative impact on both production and exports.
Back in the first quarter of 2014, the turnover index was up by 3.8 percent year-on-year.
Data on domestic consumption, private investments, exports, lending and foreign direct investment provide a mixed picture of the Albanian economy in the first quarter of this year.
Domestic consumption, indirectly measured by the value added tax, the most important tax levied at a fixed 20 percent rate on almost every product and service, suffered an 11 percent in the year’s first quarter.
Meanwhile, private investments, measured by imports of “machinery, equipment and spare parts” rose by 22 percent to around 25.4 billion lek (€178 mln) in the first quarter of this year, leading the import list.
Data published by the country’s central bank in its quarterly current account report shows FDI rose to 256 million euros in the first quarter of 2015, up from 172 million euros during the same period last year, registering a sharp 49 percent increase.
In addition, floods that hit southern Albania in February are estimated to have affected the livelihoods of 42,000 people and caused direct damage of some Euro 10 million.
Albania’s Economic Sentiment Indicator dropped by 4.6 percentage points in the first quarter of this year, registering a turning point after a recovery in four consecutive quarters, affected by a confidence drop in all sectors of the economy, including industry, construction, services, trade, and deteriorating consumer confidence , according to a central bank survey.
Top trade partner Italy escaping recession and the start of the Trans Adriatic Pipeline construction are expected to have a major impact on the Albanian economy in 2015 when government and international financial institutions expect a recovery to 3 percent after sluggish GDP growth rates of 1 to 2 percent in the past three years.
Public debt at around 70 percent of the GDP, non-performing loans at around a quarter, lending struggling to remain at positive growth rates and a slowdown in exports are considered key barriers to Albania’s growth.
Data published by the country’s state statistical institute, INSTAT, show the Albanian economy grew by 1.89 percent in 2014, up from an average of 1.2 percent in the previous two years, an average of 3.5 percent annually in the 2009-2011 period and a pre-crisis decade of 6 percent.
The Albanian government and the IMF and World Bank which are assisting in reforms with lending and expertise, expect the country’s economy to accelerate from 2.1 percent in 2014 to 3 percent in 2015, 4 percent in 2016 and 4.5 percent in 2016 and 2017.
