Minerals and fuels are the only products keeping crisis-hit Albanian exports growing at a moderate pace during this year
TIRANA, Dec. 26 – Sluggish demand from crisis hit EU countries, the destination of 66 percent of Albanian exports, has considerably affected foreign demand for Albanian products. After shrinking in the first quarter of the year, exports returned to growth in the second quarter of the year and registered an 8.6 percent increase to 196 billion lek (Euro 1.38 billion) in the first eleven months of 2012, according to data by state Institute of Statistics, INSTAT. Back in 2011 and 2010 exports grew by around 20 annually, significantly contributing to the 3 percent GDP growth rates.
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 29 percent increase in sales of “minerals, fuels and electricity” in the first eleven 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 69 billion lek (Euro 436 million) in the first eleven months of this year, exports of “minerals, fuels and electricity” ranked on top of the list, registering a 29 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 4 percent to 57 billion lek for the first eleven months of this year. The garment and footwear industry, which employs around 100,000 people now accounts for 30 percent of total exports. Under the new fiscal package approved by Parliament, 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, Prime Minister Berisha has pledged.
‘Construction materials and metals’ rank the third most important exports with 37 billion lek in the first eleven months of this year, down 3.2 percent compared to the same period last year.
Exports in 2009-2011
Bank of Albania data available in Euro show exports continued to positively perform despite the crisis-hit EU member countries, which are the destination of 70 percent of Albania’s exports. Fuelled by ongoing rising demand from Italy, Albanian exports continued registering double-digit growth for the second year in a row after the shrink in the outbreak of the global crisis in 2009. Central bank data show Albania’s exports rose by 19.7 percent to Euro 1.4 billion in 2011, compared to an annual growth rate of 56 percent in 2010 and an 18 percent shrink in 2009. Despite suffering severe debt crisis and its economy slowing down, Italy continued remaining Albania’s top trade partner accounting for 53 percent of exports and 30 percent of imports. Detailed INSTAT data show the fa谮 industry, producing garment and footwear products with imported raw material, continued remaining the top export performer also thanks to Arab spring turmoil and the removal of customs fees.
Top trade partners
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 eleven months of 2012, Albania exported around 99 billion Lek of goods to Italy, up 3.8 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 eleven months of this year at 8.7 billion lek, down 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.
Crisis-hit Spain surprisingly ranks the second most important destination of exports for the eleven months of 2012 with around 18.5 billion lek, up 166 percent compared to the same period last year. Kosovo ranks third with 16.4 billion lek. Albanian exports to neighbouring Kosovo have registered a 22 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.
Imports shrink
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. Imports in the first eleven months of this year dropped by 1.5 percent to 480 billion lek, according to INSTAT data. 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 eleven months of this year dropped by 9 percent to 88 billion lek. The import list is topped by ‘minerals fuels and electricity’ at 100 billion lek. Imports of food, beverages and tobacco rose by only 1.5 percent to 84 billion lek in January-November 2012.
