Agriculture and industry in irreversible decline, how the bases of production in our country are being destroyed

2024-12-26 08:18:29Biznes SHKRUAR NGA REDAKSIA VOX
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While Albania's economy has been growing beyond the decade's average in the last three years, productive sectors, such as agriculture and industry that provide the country with long-term benefits, are in irreversible decline.

Agriculture, the main sector of the Albanian economy that contributes more than 18% of GDP, fell by -2.5% in the third quarter of 2024. This was the strongest decline since the fourth quarter of 2022 when production was damaged by frost. According to the data in the chart below, agriculture fell for the eighth consecutive 3-month period.

For the first 9 months, the agricultural sector has recorded a decline in production of about 1 percent compared to the same period last year.

Industry, the other sector that is the basis of "Made in Albania" production, has been in decline for six quarters. In July-September, GDP in industry fell by 4 percent compared to the same period a year ago.

In 2023, agriculture contributed to 32.3% of employment in the country, while the industrial sector contributed to 11.4% of total employment.

Agriculture and industry are two important branches of the Albanian economy. In 2023, agriculture contributed 18.5% of total GDP and industry 10.9%, while both together account for 30% of GDP.

The agricultural and industrial production sectors were severely damaged by exchange rate developments where the local currency has strengthened significantly against the euro.

In 2013, the euro was exchanged for an average of 140.5 lekë, while this year the euro was exchanged for less than 99 lekë. This performance has ruined the income from the sales of Albanian exports. On the other hand, it has favored imports, which were purchased cheaper due to the fall in the value of the euro, making Albanian products compete in domestic markets.

This year, many businesses in the manufacturing sector that have gone bankrupt have transferred to other sectors or are switching to imports.

Economic growth is being led by less sustainable sectors, such as construction and tourism. Construction grew by 5.3 percent in the third quarter, but its contribution to total employment has not kept pace. In 2023, construction contributed 7.6 percent to total employment, at levels more or less similar to 2022.

Agriculture and industry in irreversible decline, how the bases of production in

Tourism is the fastest growing branch of the economy, becoming the main promoter of growth. But the high exposure to this sector makes the crisis more acute, as in the case of the Covid-19 pandemic.

Experts claim that only manufacturing has the power to take the economy up the value chain and provide sustainable income in the long term./ monitor

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