Turnover index improves, employment worsens

TIRANA, Oct. 1 – The Albanian economy has overcome the slight shrink in the first quarter of 2012 but preliminary data show the growth rate has been moderate due to the slight recovery of the industry and trade sectors. Short-term statistics published by INSTAT show the industry sector which in the first quarter of 2012 suffered a double digit shrink, registered an increase in its turnover index with the volume of industrial production up by 73.5 percent. Despite the improved situation the number of employees in this sector was cut by 2 percent year-on-year while wages were raised by 3.1 percent. The extracting industry, dominated by foreign-owned oil and mining companies registered a 23.5 percent increase in its turnover index. The volume of industrial production also rose by 36 percent year-on-year while the number of employees was down by 6.7 percent. Wages also rose by 4.1 percent.
The processing industry registered an increase by only 1.5 year-on-year during the second quarter of 2012 in its turnover index. The processing industry dominated by the garment and footwear sector, registered an increase of only 0.1 percent in its volume of production while the number of employees was down by 2.6 percent.
Electricity, gas and water supply companies registered a 21 percent increase in its turnover index. However, the number of employees dropped by 3 percent compared to the second quarter of 2011.
The construction sector which has been in crisis since 2008 suffered a 15.5 percent shrink in the turnover index. The volume of production was down by 10 percent while staff was cut by another 2.8 percent.
The turnover index in the wholesale trade grew by 9 percent year-on-year and the number of employees was up by 7.2 percent.
Hotels, as the main accommodation units in the tourism industry, also continue suffering crisis impacts with the number of employees down by 11.7 percent and wages lowered by 6.3 percent.
The transport sector, made up of railway, maritime, air and travel agencies all registered lowered turnover indices.
Despite the higher turnover, businesses continue suffering as evidenced by the profit tax for the first eight months of 2012, which was down by 12.5 percent year-on-year.
INSTAT has scheduled to publish the GDP growth for the second quarter of 2012 on Oct.5 but previous experience has shown the publication has been delayed for even several weeks.
Lower domestic consumption, stagnating exports, some of the key industries in crisis, lending and deposits growth rates slowing down and government revenues far below targets are some of the symptoms of the ailing Albanian economy in the first half of 2012 which international financial institutions have warned will see Albania register growth rates between 0.5 to 1.5 percent, the lowest the country has faced after the shrink in the notorious 1997 pyramid investment schemes.
Poor performance in early 2012 when the economy officially shrank by 0.2 percent and top sectors such as industry and crisis-hit construction dropping by double-digits of around 20 percent proves the difficult situation.
Lower retail sales in the second quarter of 2012 signal the Albanian economy has not made much progress after the slight 0.2 percent shrink in the first quarter of the year. INSTAT data published this week show retail sales continued shrinking for the second quarter in a row dropping by 1.2 percent year-on-year.
Domestic consumption, the key driver of the Albania economy continues struggling as shown by the performance of value added tax and excise tax. VAT, which indirectly measures consumption, grew by a mere 1.4 percent while the excise tax levied on so-called luxury products such as fuel, tobacco and alcoholic beverages was down by 0.4 percent compared to the first half of 2011.