Sluggish exports, shrinking imports warn of gloomy 2013

TIRANA, Sept. 24 – After the slight shrink in the first quarter of 2012 officially confirmed by INSTAT, the Albanian economy continues striving with poor growth rates as indirectly shown by the performance of several indicators related to domestic consumption, and the negligible growth in exports.
Latest data published by INSTAT show exports continue suffering while imports remain in negative growth rates. Affected by poor performance in the garment and footwear industry, Albanian exports for the first eight months of this year grew by only 5.8 percent to 137 billion lek. Meanwhile, total imports were down by 1.7 percent year-on-year in Jan-Aug. 2012 despite a sharp rise in electricity imports because of the unfavourable situation at home.
A 25 percent drop in the import of construction materials and metals was the main cause of the poor performance of imports. Imports of machinery, equipment and spare parts also dropped by 1.7 percent to around 65 billion lek, showing that businesses remain pessimistic over new investments as consumers have considerably cut expenditure and are on a saving trend expecting harsher times ahead.
“Food, beverage and tobacco” imports stood at identical levels of 61 billion lek in Jan-Aug 2012, reconfirming the freeze in domestic consumption in a country which is a net importer. “Mineral, fuel and electricity” imports during this period jumped by 30 percent to 44 billion lek, ranking first in the import list.
Import of excise goods, the majority 80 percent of which is made up of oil products, rose by around a quarter compared to last July. However, trade deficit in August 2012 was down by 13.8 percent compared to a year ago.
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 41.2 billion lek for the first eight months of this year. The garment and footwear industry accounts for 32 percent of total exports and employs around 70,000 people.
“Minerals fuel and electricity” now rank the country’s top exports with 48 billion lek, up 28 percent compared to the first eight months of 2011. Exports to top trade partner Italy, the destination of more than half of Albanian exports, have also been slightly affected by the crisis there. Exports to Italy in the first seven months of this year rose by a mere 4.8 percent to 70 billion lek, accounting for 54 percent of the total exports. Meanwhile, exports to Greece, the country’s second most important trade partner remained almost unchanged at around 6.8 billion lek, accounting for only a 5 percent share. 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 with around 11.2 billion lek followed by Kosovo with 10.7 billion lek. Albanian exports to neighbouring Kosovo have registered a 24 percent increase to 10.7 billion lek, despite a temporary ban imposed on Albanian cement last July. As far as imports are concerned Italy tops the list with 105 billion lek, 31 percent of the total, followed by Greece with 34 billion lek, or 10 percent of the total.
The escalating Eurozone crisis and especially the situation in Greece and Italy, Albania’s top trade partners and hosts to more than 1 million migrants, is expected to further aggravate matters. The IMF expects Italy, the destination of around half of Albanian exports to face recession in 2012 and 2013. Neighbouring Greece whose influence on Albanian trade and investments has been declining is expected to face another year of recession.