Economy of Albania

Infobox Economy
country = Albania


width = 250px
caption = 1000 Lek note
currency = Lek (ALL)
year = Calendar year
organs = WTO
rank = 118th
gdp = $19.76 billion (2007)note: Albania has a large gray economy that may be as large as 50% of official GDP (2007 est.)
growth = 5.0% (2007) [http://www.indexmundi.com/albania/gdp_real_growth_rate.html]
per capita = $5,700 (2007) [http://www.indexmundi.com/albania/gdp_per_capita_(ppp).html]
sectors = agriculture: 23.2%, industry: 18.8%, services: 57.9% (2005 est.)
inflation = 3% (2007)
poverty = 18.5% (2005) [http://www.undp.org.al/index.php?page=WWD/p_red]
labor = 1.08 million (2005 est.)
occupations = Agriculture 50%, Non-agricultural private sector 20%, Public sector 15.9% (2005 est.)
unemployment = 30% (2007)
industries = Food processing, textiles and clothing; lumber, oil, cement, chemicals, mining, basic metals, hydropower
exports = $658.1 million f.o.b. (2005 est.)
export-goods = textiles and footwear; asphalt, metals and metallic ores, crude oil; vegetables, fruits, tobacco
export-partners = Italy: 72.4%, Greece: 10.5%, Serbia and Montenegro: 5% (2005)
imports = $2.622 billion f.o.b. (2005 est.)
import-goods = machinery and equipment, foodstuffs, textiles, chemicals, etc.
import-partners = Italy: 29.3%, Greece: 16.4%, Turkey: 7.5%, China: 6.6%, Germany: 5.4%, Russia: 4% (2005)
debt = external: $1.55 billion (2004)
revenue = $1.96 billion (2005)
expenses = $2.377 billion; including capital expenditures of $500 million (2005)
aid = recipient: ODA: $366 million (top donors were Italy, EU, Germany) (2003 est.)
cianame = al

The Economy of Albania is poor-performing by Western European standards, but is making the difficult transition to a more open-market economy from its communist past.

History

The collapse of communism in Albania came later and was more chaotic than in other Eastern European countries and was marked by a mass movement of refugees to Italy and Greece in 1991 and 1992. Attempts at reform began in earnest in early 1992 after real GDP fell by more than 50% from its peak in 1989. Albania currently suffers from high organised crime and corruption rates, the highest in Europe. Reforms are taking place to fix that. [http://www.worldpress.org/1001cover5.htm]

The democratically elected government that assumed office in April 1992 launched an ambitious economic reform program to halt economic deterioration and put the country on the path toward a market economy. Key elements included price and exchange system liberalization, fiscal consolidation, monetary restraint, and a firm income policy. These were complemented by a comprehensive package of structural reforms including privatization, enterprise, and financial sector reform, and creation of the legal framework for a market economy and private sector activity. Most agriculture, state housing, and small industry were privatized. This trend continued with the privatization of transport, services, and small and medium-sized enterprises. In 1995, the government began privatizing large state enterprises. After reaching a low point in the early 1990s, the economy slowly expanded again, reaching its 1989 level by the end of the decade. [http://earthtrends.wri.org/text/economics-business/variable-638.html current GDP per capita]

Macro-economic trend

This is a chart of trend of gross domestic product of Albania in Albanian currency and at Purchasing Power Parity (PPP--i.e., taking inflation into account) estimated [ [http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 imf.org] ] by the International Monetary Fund with figures in billions of Leks respectively.

For purchasing power parity comparisons, the US Dollar is exchanged at 44.11 Leks only. Average wages in 2007 hover around $16-19 per day.

Results of Albania's efforts were initially encouraging. Led by the agricultural sector, real GDP grew by an estimated 11% in 1993, 8% in 1994, and more than 8% in 1995, with most of this growth in the private sector. Annual inflation dropped from 25% in 1991 to single-digit numbers. The Albanian currency, the lek, stabilized. Albania became less dependent on food aid. The speed and vigor of private entrepreneurial response to Albania's opening and liberalizing was better than expected. Beginning in 1995, however, progress stalled, with negligible GDP growth in 1996 and a 9% contraction in 1997. A weakening of government resolve to maintain stabilization policies in the election year of 1996 contributed to renewal of inflationary pressures, spurred by the budget deficit which exceeded 12%. Inflation approached 20% in 1996 and 50% in 1997. The collapse of financial pyramid schemes in early 1997 - which had attracted deposits from a substantial portion of Albania's population - triggered severe social unrest which led to more than 1,500 deaths, widespread destruction of property, and an 8% drop in GDP. The lek initially lost up to half of its value during the 1997 crisis, before rebounding to its January 1998 level of 143 to the dollar. The new government, installed in July 1997, has taken strong measures to restore public order and to revive economic activity and trade.

Albania is currently undergoing an intensive macroeconomic restructuring regime with the International Monetary Fund and World Bank. The need for reform is profound, encompassing all sectors of the economy. In 2004, the largest commercial bank in Albania -the then Savings Bank of Albania- was privatised and sold to Raiffeisen Bank of Austria for US$ 124 million. [ [http://www.slvadvisors.com/News.htm "Privatization of Savings Bank of Albania"] .]

External trade

However, reforms are constrained by limited administrative capacity and low-income levels, which make the population particularly vulnerable to unemployment, price fluctuation, and other variables that negatively affect income. The economy continues to be bolstered by remittances of some 20% of the labor force that works abroad, mostly in Greece and Italy. These remittances supplement GDP and help offset the large foreign trade deficit. Most agricultural land was privatized in 1992, substantially improving peasant incomes. In 1998, Albania recovered the 8% drop in GDP of 1997 and pushed ahead by 7% in 1999. International aid has helped defray the high costs of receiving and returning refugees from the Kosovo conflict. Largescale investment from outside is still hampered by poor infrastructure; lack of a fully functional banking system; untested or incompletely developed investment, tax, and contract laws; and an enduring mentality that discourages initiative.

Mining

In early 2008, vast and untouched deposits of oil and gas were discovered in northern Albania. The deposits total 2.987 billion barrels of oil and 3.014 trillion cubic meters of natural gas. The announcement was made by the corporation Gustavson Associates LLC, engaged by Manas Petroleum Corporation, which has a contract with the Government of Albania to make explore the northern parts of the country for oil and gas deposits. [http://www.focus-fen.net/index.php?id=n131394]

Statistics

Industry

Industrial Production Growth Rate: 3.1% (2004 est.)

Energy

Electricity - Production: 5.434 TWh (2004)

Electricity - production by source:
*"fossil fuel:" 2.9%
*"hydro:" 97.1%
*"other:" 0%
*"nuclear:" 0% (2001)

Electricity
* "Consumption": 5.231 TWh (2004)
* "Exports": 0.390 TWh (2004)
* "Imports": 0.567 TWh (2004 est.)

Oil
*"production": 3,600 barrel/day (946 m³/d) 2005
*"consumption:" 25,200 barrel/day (3,560 m³/d) 2005
*"exports": NA (2001)
*"imports": 21,600 barrel/day (3,560 m³/d) 2005 est.
*"proved reserves": 185.5 million barrel (29,490,000 m³) (1 January 2002(Natural gas
*"production": 30 million m³ (2003 est.)
*"consumption": 30 million m³ (2003 est.)
*"exports": 0 cu m (2001 est.)
*"imports": 0 cu m (2001 est.)
*"proved reserves": 2.832 km³ (1 January 2002)

Agriculture

:"Products": wheat, maize, potatoes, vegetables, fruits, sugar beets, grapes; meat, dairy products

Exchange Rates

: Lekë per US dollar - 92.668 (2007), 98.384 (2006), 102.649 (2005), 102.78 (2004), 121.863 (2003), 140.155 (2002), 143.485 (2001), 143.709 (2000), 137.691 (1999)

References

*From 2006, factbook
*From 2003, StateDept
*From 2007, International Monetary Fund

ee also

*Economy of Europe
*List of Albanian companies
*List of banks in Albania

External links

* [http://www.albic.net Albic Business Web Portal in Albania]
* [http://www.bankofalbania.org Bank of Albania (official site)]
* [http://www.eia.doe.gov/emeu/world/country/cntry_AL.html U.S. Department of Energy - Country Report on Albania]