The decline in exports deepens, shrinking by 22.3 percent in the first 3 months of the year. The demoralization of the textile and footwear industry after the deep recession

Exporters have not been able to raise their heads in the first months of this year, seeing a significant drop in their income, affected both by the unfavorable price and demand situation in the international markets and the fall of the euro in the domestic market.

For textiles and footwear, the main group of exports and one of the largest employers in the country, the contraction is deepening, giving the main effect to the negative performance of March. Meanwhile, for the first time in many years, all groups were down, which was double-digit, except for food and beverages, which had a single-digit contraction.

According to INSTAT, during the month of March 2024, in the decrease of exports of -21.0%, the groups: "Textiles and shoes" with -7.2 percentage points, "Minerals, fuel, electricity" with -5, 8 percentage points, Construction materials and metals" with -4.6 percentage points, etc.

The contraction is strong for the entire quarter. According to INSTAT, in this quarter the exports of goods reached the value of 95 billion ALL, decreasing by -22.3%. The groups that have negatively affected the annual decrease in exports are: "Minerals, fuel and electricity" with -11.1 percentage points, "Textiles and shoes" with -5.6 percentage points, "Construction materials and metals" with -3.6 percentage points, etc.

Textiles and shoes do not raise their heads, the performance is more negative than during the pandemic

In March, exports of textiles and footwear, the largest export group in the country (with 29% of the total), fell by 25.6%, from 15.7%, which was the contraction for February. For the quarter, exports of textiles-shoes were 27 billion ALL, with a contraction of 20% on an annual basis.

For months, the industry has been going through a difficult period influenced by many factors, such as the increase in costs that has caused partners to move to the Middle East, reducing orders, and especially the devaluation of the euro, which reduces their income when converted to lek. The performance is more negative than during the pandemic period, when the global economy was temporarily blocked.

Florjan Zekja, from the Association of Exporters, said that there are several reasons for this strong contraction. First, the fall of the euro has demoralized the market and created a lack of confidence in the future of customers.

Second, the increase in internal and external costs, such as the increase in wages and other costs such as transport from China as a result of wars or with other countries such as Germany or Austria with the increase of carbon road taxes.

"These lead to the loss of competition in the region and the relocation of customers to more profitable countries which have cheaper labor force and raw materials in the country", said Zekja.

Currently, one euro is exchanged for less than 102 ALL, from 116 ALL in February-March 2023.

This situation is forcing many factories to close, according to announcements from the Association of Exporters. The biggest bankruptcies occurred in districts and factories that employed fewer than 120 workers, worked mainly on subcontracts, had lower profit rates and were unable to cope with the crisis.

Construction materials and metals continue to contract

"Construction materials and metals" were the second largest group in the country for the three months, with 19.4% of the total. This group is affected by the performance of Kurum, the steel processor, which is one of the largest exporters in the country. In March, this group fell by 23.3%, while for the 3rd month the contraction is 19.3%. The sector is suffering from weak regional demand and shrinking prices.

Minerals, fuels, energy with strong decline

"Minerals, fuels, energy" was the third largest group in the country, with 19.2% of the total, as a result of the strong contraction in the first months of the year. In March, the group reduced sales by 27.2%, while for the 3rd month the drop is 43%, influenced by the negative performance in January and February. The group's performance is dependent on sales of Bankers Petroleum, the country's largest exporter, and weather-related electricity trading.

Food, drink and tobacco marks a decline

"Food, drink and tobacco", one of the groups with the best performance in recent years, returned to the decline in March, after a modest increase in the first two months of the year. In March, exports of this group fell by 4.2%, after weak growth of 1.5% in February. Despite the potential, the sector is being affected by rising costs, which are making it less competitive in the region, as well as by weather conditions. The drop in the prices of exported products also had a negative impact.

Machinery, equipment, spare parts are damaged by euros

"Machinery, equipment, spare parts" was another group that showed good performance in recent years, as a result of the entry of factories that assembled parts for the automotive industry. But this group is also suffering from the devaluation of the euro, rising costs and labor shortages. In March, exports fell by 11.6%, while for the 3rd month the contraction is 10.6%.

Trade deficit increases

According to INSTAT, in March 2024 exports of goods reached the value of 33 billion ALL, decreasing by -21.0%, compared to the same period a year ago and increasing by 3.4%, compared to February 2024. Imports of goods reached the value of ALL 75 billion, decreasing by 7.0% compared to the previous year and increasing by 1.3% compared to February 2024. The trade deficit for this month is 42 billion ALL, increasing by 8.3% compared to March 2023 and decreasing by -0.4% compared to February 2024.

In this quarter, exports of goods reached the value of 95 billion ALL, decreasing by -22.3%, while imports of goods reached the value of 209 billion ALL, increasing by 0.4%, compared to a year ago. The trade deficit reached the value of ALL 114 billion, increasing by 32.8%, compared to the same period of 2023.

Exports fall with Italy and Kosovo, increase with North Macedonia and the United Kingdom

In the month of March 2024, the countries with which Albania had the largest increase in exports, compared to March 2023, are: North Macedonia (8.5%), the United Kingdom (39.7%). While the countries with which exports have had the biggest decrease are: Italy (10.9%), Kosovo (15.1%) and Greece (22.6%). During this quarter, the countries with which exports have had the biggest decrease are: Italy (11.7%), Kosovo (7.3%) and Greece (37.5%).

In March 2024, the countries with which Albania had the largest increase in imports are: Turkey (7.1%), China (0.9%) and Germany (7.2%). While the countries with which imports have had the biggest decrease are: Italy (1.5%), USA (26.6%) and North Macedonia (27.5%). During this quarter, the countries with which Albania had the largest increase in imports, compared to a year ago, are: Turkey (21.6%), Greece (25.8%) and Germany (10.5%). ). While the countries with which imports have had the biggest decrease are: Italy (3.1%), China (10.0%) and Spain (5.2%)

Trade exchanges with EU countries account for 60.3% of all trade. In March 2024, exports to EU countries account for 72.3% of total exports and imports from EU countries account for 54.9% of total imports. The main trade partners are: Italy (31.0%), Turkey (8.9%), Greece (7.2%) and Germany (7.0%).

Trade exchanges, for the first quarter of 2024, with EU countries account for 58.8% of all trade. In the period January - March 2024, exports to EU countries account for 74.6% of total exports and imports from EU countries account for 51.7% of total imports. The main trading partners are: Italy (29.6%), Turkey (9.6%), Greece (7.3%) and Germany (7.1%).