Data show Albanians are spending less on food, clothes and footwear, books and newspapers and more on medicines, household equipment and fuel
TIRANA, July 23 – Retail sales suffered another shrink in the first quarter of this year reconfirming the difficulty businesses are facing as consumers’ purchasing power drops and their saving trend increases. Latest INSTAT data show retail sales dropped by 8.3 percent in the first quarter of this year when the Albanian economy shrank by 0.2 percent year-on-year, according to data published this week by INSTAT, the state statistical institute. Compared to the final quarter of 2011, retail sales were down by a sharp 22.5 percent.
Data show Albanians are spending less on food, clothes and footwear, books and newspapers and more on medicines, household equipment and fuel.
Employment in this sector shaped by mostly small independent shops and open markets of self-grown products continues dropping. In the first quarter of 2012 it shrank by 5 percent year-on-year.
INSTAT data show retail sales of mixed articles in non-specialized stores, mainly food, beverages and tobacco fell by a sharp 38.4. In specialized stores, the retail sales for the same products was up 15 percent compared to the first quarter of 2011.
“Clothes, footwear and leather” products were down by 20 percent, while book and newspapers sales dropped by 9.2 percent. Household equipment retail sales were up by 12 percent while medicines and cosmetic products rose by a considerable 30 percent year-on-year.
While “trade, maintenance and repair of motor vehicles and motorcycles” fell by 8.9 percent, retail fuel prices rose by 16.7 percent despite diesel and petrol prices remaining at record high levels. Employment in the trade maintenance and repair of motor vehicles and motorcycle is reported to have increased by 15.7 percent mainly as a result of considerable rise in jobs in the retail fuel sales.
The publication of the retail sales, usually made before the quarterly GDP comes after one month of delay. INSTAT had scheduled to publish the retail sales on the first quarter of 2012 on June 26.
The difficult situation Albanian businesses are facing is also unveiled by the performance of profit tax which during the first half of 2012 has been down by 23.3 percent.
The Albanian economy suffered a slight shrink in the first quarter of this year, which is the second during the past two years, revealing that the global crisis impacts will be far tougher than government expects. Latest data by INSTAT, often prejudiced for the unreliability of its data, show the GDP contracted by 0.2 percent in the first quarter of 2012 year-on-year as performance in the key industry and construction sectors registered double-digit shrinks.
Industry and the already crisis-hit construction were the poorest performing sectors suffering sharp shrinks of 19.3 percent and 17.6 percent, respectively. Post-telecommunication and transport also dropped by 4.8 percent and 1.7 percent y-o-y.
Services, trade and agriculture were the only sectors to register positive growth in the first quarter recording growth rates of 11.1 percent, 5.3 percent and 4.5 percent respectively.
With public debt standing at the legal ceiling of 60 percent of the GDP, bad loans at 20 percent of the total credit portfolio, and remittances on a falling trend since the 2008 global crisis, the ongoing drop in retail sales is another sign of the crisis impacts Albania is facing. Retail sales registered a turning point in the final quarter when they rose by a mere 0.2 percent y-o-y and grew by 6.8 percent compared to third quarter ending their downward trend since more than one year.
The INSTAT data confirm the pessimistic expectations by both businesses and consumers. According to a survey by the European Bank for Reconstruction and Development, the economic crisis 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 which surveyed almost 39,000 households in 34 countries.
The International Monetary Fund and the European Bank for Reconstruction and Development expect the Albanian economy to grow by 0.5 percent to 1.2 percent while the World Bank has made a 1.6 percent forecast, citing high public debt levels and spillover impacts from the crisis in Greece and Italy, Albania’s top trade partners. Government has postponed budget cuts and the review of the overoptimistic 4.3 percent growth target for next September when several major privatizations are expected.
Main industries suffering
Facing lower domestic and external demand, almost all major industries in Albania continued cutting their staff and freezing wages in the first quarter of 2012, according to short-term statistics published by INSTAT.
Data measuring turnover indices in industry, construction, hotels, wholesale trade, transport and post-telecommunication show almost all of these industries are suffering a decrease in production and sales, forcing them to make compulsory job cuts, lower wages or index them only to inflation.
Data show the industry sector suffered a 1.1 percent drop in production and cut 0.8 percent of its staff compared to the first quarter of last year. Within this group, the processing industry, which produces Albania’s top exports, suffered a 16 percent drop in production, cut 0.6 percent of its staff and lowered wages by 4.4 percent. The extracting industry, which has been attracting considerable foreign direct investment in recent years registered a 28 percent increase in the volume of production, and raised wages by 20 percent.
The construction sector, once the key driver of the Albanian economy, further plunged into crisis suffering a 22.6 percent drop in production which led to staff being cut by 2.6 percent and wages lowered by 7.6 percent.
The wholesale trade rather recovered with the turnover index rising by 6.4 percent, staff cut stopping and wages rising by 3.5 percent. Hotels were probably the most affected in the first quarter of 2011 when they cut staff by 15.4 percent and lowered wages by 12 percent. The post-telecommunication sector also reports higher employment numbers and wages for the first quarter.
Turnover indices in the rail, maritime, and air transport registered negative growth rates in the first quarter of this year.
