Economy of Albania

By | April 29, 2022

According to cheeroutdoor, GDP growth in % was: in 1997 – 7.0; in 1998 – 8.0; in 1999 – 7.3; in 2000 – 7.8; in 2001 – 6.5; in 2002 – 4.7; in 2003 – 6.0 (forecast). Despite the fact that the growth in 2002 of 4.7% (instead of the planned 7%) was the lowest for the entire period of the rule of the center-left coalition, taking into account the migration processes, the growth of GDP per capita in 2002 turned out to be higher – 1499 US dollars compared to 1332.6 dollars in 2001.

In 2002 inflation was 5.4%. The number of employed in the country grew by only 2 thousand people. – up to 921 thousand people. Unemployment (14.8%) was slightly higher than in 2001 (14.5%), but still lower than in 2000.

During the rule of the center-left coalition, the private sector has received significant development in the Albanian economy. If in 1998 its contribution to the budget was 28%, then in 2001 it exceeded 72%, and in 2002 it was 78%.

As a result of the “market” collapse of industry during the five-year rule of the radical democrats, production volumes were sharply reduced. If on horseback In 2001, the level of production compared to 1993 in the industry as a whole (due to the growth in electricity production by 42.7%) was 77.8%, in the extractive industry it did not exceed 25%, in the energy sector 42.1%, in the manufacturing industry 37.3%.

Particularly indicative was the situation in such a successful in former times and foreign exchange profitable export industry as the oil production and oil refining industry. Oil production in Albania from 1,067 thousand tons in 1990 fell to 488 thousand tons in 1996. In the crisis year of 1997, the industry literally collapsed, production fell to 359 thousand tons. In 1999, oil production dropped to 323 thousand tons. A similar trend threatened to lead to the fact that by 2010, domestic production would cover only 32-45% of domestic needs compared to 75% in 1999. Moreover, the production of direct fuel could provide only 20% of domestic needs in general, compared to 55% in 1999.

The crisis in the energy industry had a significant impact on the solution of economic problems. Power outages in 2002 ranged from 4 to 15 hours per day. And this despite the fact that 70% of the country’s water resources suitable for generating electricity were not used. As for hydrocarbon energy sources, the level of oil production (350 thousand tons in 2002) remained still low, and in 2003 it was supposed to increase by only 20 thousand tons. Therefore, in the short term, the country is forced to import the missing energy carriers. For oil products, the share of imports can reach 88%.

In agriculture, in the course of radical reforms in the country, 97.7% of the cultivated areas that were state-owned were divided. As a result, 413 thousand owners of arable land immediately appeared with an average allotment of 1.4 hectares per farmer.

Until the 1990s St. 60% of cultivated land was subjected to drainage. During the years of “reforms” there was a significant reduction in irrigation capacity. As a result, only 54% of previously drained land remained suitable for use.

In 2000, domestic producers provided 99% of the milk consumed in the country, 96% of vegetables, 92% of meat, 97% of eggs, and 76% of fruit. Grain growing, on the other hand, was hardly recovering from the radical reforms of the Democrats. In pre-crisis 1996, less than 271 thousand tons of wheat were harvested in the country, i.e. OK. 42% of the 1988 level (650 thousand tons). In 1999, when the harvest amounted to 500 thousand tons of wheat (80 thousand tons more than in 1998), this covered only half of the country’s needs. The wheat crop harvested in 2002 provided less than 40% of domestic needs and the missing 60% had to be imported.

In general, in 2002, the growth of agriculture was 2.1%, which was less than the expected 3%, but still more than 1.4% in 2001.

With the contribution of the agricultural sector to GDP up to 54% (2000) and its provision of 47% of the country’s exports, agricultural products accounted for more than half of Albanian imports – 53%.

The Memorandum on Economic and Financial Policy for 2002–04 (developed with the assistance of the IMF) and the Medium-Term Budgetary Financing Program for 2003–05, adopted by the government in 2002, declared the main goals of further consolidation of macroeconomic indicators: stabilization of economic growth at the level of 7%; keeping inflation within 2-4%; growth of budget revenues by 15-17% per year; reducing the overall budget deficit and financing it from domestic sources. At the same time, in relation to the budget deficit, the task is to reduce it to the end. 2005 to 6.5% of GDP.

In accordance with the adopted Strategy for Economic and Social Development, it was planned to maintain the planned indicators of economic growth and the inflation rate within the range of 2-4% during 2003-06. Investment costs were planned at the rate of 20 billion leks per year, i.e. 10% of the budget. To replenish it, revenues from customs duties alone should have reached 23% of GDP by 2006. At the same time, it was planned to reduce the budget deficit from 8 to 6% of GDP.

The state budget for 2002 included an increase in tax revenues, especially customs duties, from 16.2% of GDP (2001) to 17.2%. The envisaged increase in budget revenues by 11-12% led to a reduction in the budget deficit from 9.2% of GDP (in 2001) to 8.4%. The regular 2003 budget provided for an increase in revenue by 14.5%, expenditure by 10.4%, the budget deficit was supposed to be reduced to 6.6% of GDP, and financing of the deficit from domestic sources to be reduced to 2.9% of GDP.

In 2002, the country’s foreign exchange reserves increased by $101.5 million, i.e. by 13.8% compared to 2001. By the end. 2002 they amounted to 838.9 million US dollars. Domestic debt was estimated at $2.3 billion.

In terms of the standard of living of the population, Albania continues to occupy one of the last places in Europe. In 2003, one in six families had less than $1 a day per person, and one in two had less than $2. 29.6% of the population were below the poverty line, of which half were in extreme poverty. 4/5 of all poor Albanians were rural residents.

The living wage in 2002 was determined by the Ministry of Labor and Social Affairs at $50. In the same year, a number of measures were announced to improve the situation of several categories of the country’s population at once. From July 1, 2002, it was planned to increase pensions for urban residents by 10%, and for rural residents – by 25%. The measure concerned almost 550 thousand people. At the same time, the salaries of doctors increased by 25-40% and teachers by 20%. From September to December 2003, an average wage increase of 7% was to be extended to workers in the entire public sector.

In 2002, Albania’s total foreign trade increased by 11.7%, and exports by 11.3% (up to 338 million US dollars). The negative trade balance at the end of the year exceeded $1.1 billion.

A significant role in covering the constantly growing negative balance of foreign trade was played by money transfers to the country from Albanian emigrants. The amount of these transfers increased every year. So, it was (million dollars): in 2000 – 438.6, in 2001 – 550.2, in 2002 – 606, in 2003 – 650 (estimate).

The external debt of the country, amounting to the game. 2001 697.5 million dollars, continued to increase. To con. 2002 it reached 979 million US dollars. As a result, each Albanian accounted for an average of approx. 310 dollars of debt abroad.

An important area of foreign economic activity was the provision of foreign investment. Thus, in 2000, US$ 143 million in direct investment was attracted from abroad, which accounted for 24% of the total foreign investment of US$ 598 million. For the entire period from 1992. In 2001, foreign direct investment increased by 54% to 220.2 million dollars. However, in 2002 they amounted to only 137 million dollars, having decreased by almost 38% compared to the previous record year.

Economy of Albania