Trade gap widens as exports slow down to 7%

Exports kept growing only thanks to a sharp 25 percent growth in garment and footwear products, whose overwhelming majority of more than 80 percent has top trade partner Italy as its destination.
TIRANA, Sept. 29 – After ending their double-digit growth in July 2014, Albania’s exports continue slowing down while imports considerably recovered, negatively affecting the trade balance in a net importer such as Albania, according to data published by the country’s state statistical institute, INSTAT.
Data shows Albania’s exports slowed down to 7 percent in the first eight months of this year compared to the same period last year, affected by a sharp cut in electricity exports due to the severe drought affecting the country’s wholly hydro-dependent electricity system. Exports kept growing only thanks to a sharp 25 percent growth in garment and footwear products, whose overwhelming majority of more than 80 percent has top trade partner Italy as its destination.
“Minerals, fuels and electricity” continued topping the exports’ list in the first eight months of this year, despite suffering an 8 percent decline.
INSTAT data shows exports of garment and footwear products rose to 57 billion lek (around Euro 401 million) while exports of minerals, fuels and electricity dropped to around 62 billion lek (Euro 434 million) in the first eight months of this year. Exports of construction materials and metals rank third with around 24 billion lek (Euro 170 million), up 11 percent compared to the first eight months of 2013.
Meanwhile, imports continue their growing trend unveiling a recovery in domestic consumption, but further widening the trade gap at a time when exports have slowed down to moderate single-digit growth rate.
INSTAT data shows imports grew by around 8 percent in the first eight months of this year, boosted by recovery in imports of industrial products.
Imports of “machinery, equipment and spare parts,” an indicator also measuring private investments, were up by 8.3 percent in the first eight months of this year.
Finance Ministry data shows the value added tax, an indicator for domestic consumption which remains the key driver of Albania’s growth and accounts for one-third of total government revenue, was up 16 percent in the first eight months.
Both the performance of imports of “machinery, equipment and spare parts” and VAT indicate the Albanian economy is modestly recovering and is on track to achieving its target of 2 percent growth rate after slowing down to 1.4 percent in 2013 and 1 percent in 2012, compared to a pre-crisis decade of 6 percent annually and an average of 3.5 percent from 2009 to 2011.
INSTAT data shows Italy continues remaining Albania’s top trade partner with around 52 of total exports and around 30 percent of total imports. Second comes neighbouring Greece whose trade exchanges with Albania have considerably shrunk during its past six years of recession and maintains its second top trade partner position only thanks to Albania’s imports which account for around 10 percent. Greece ranked the sixth most important destination of Albanian exports in the first eight months of this year after Italy, Spain, Kosovo, China and Turkey, according to INSTAT.
Albania’s trade gap in the first eight months of this year rose by around 9 percent to 179 billion lek (Euro 1.25 billion), according to INSTAT data. Meanwhile, the export/import coverage ratio remained almost unchanged at 50 percent.
INSTAT data shows Albania’s exports grew by 15.6 percent in 2013, registering growth rates for the fourth consecutive year after the shrink in onset of the global crisis in 2009.
An earlier INSTAT report on the performance of exports during the 2008-2012 period shows that except for the slight decline of 6 percent in the onset of the global financial crisis in 2009, Albania’s exports registered strong double digit growth rates of 54 percent and 22 percent in 2010 and 2011 before slowing down to 8 percent in 2012.
Garment and footwear products were Albania’s key exports from 2008 to 2011 but were overtaken by exports of ‘minerals, fuels and electricity’ in 2012.
Imports, which suffered negative growth rates of around 3 percent in 2012 and 2013, reflecting sluggish consumption in a net importer country such as Albania and the slowdown of the country’s economy, have registered a turning point in 2014.