Albania's foreign trade deficit widened by 10.4% y/y to ALL 128bn (EUR 920.2bn) in the first half of 2014, the statistics institute INSTAT informed. In our calculations, the gap accounted for 9.2% of the projected full-year GDP, up from 8.6% of GDP a year earlier.

The higher deficit came as both imports and exports increased by 10.3% y/y in the period. However, in absolute term the growth in exports was unable to offset higher imports.

The growth in imports was driven by an increase in all groups, with the single exception the food category, which saw an annual decline of 0.4%. In nominal terms, the main contribution came from the textile and footwear sector, up 21.1% y/y, the group of construction materials, up by 17.1% y/y, as well as imports of minerals, fuels, electricity, which advanced by 9.5% y/y in H1. Machinery and equipment, which was the country's largest import group, registered a 8.6% y/y increase.

The growth in exports was mainly driven by the group of textile and footwear, which increased by 28.2% on the year. This was the country's second largest export sector accounting for a third of total. The largest was the minerals, fuels and electricity (a 36.3% share), which however dropped 3.3% y/y. Among other sectors, exports of chemicals and plastics as well as of wood and paper witnessed a double-digit growth in the period. However, in nominal terms these two sectors had a relatively small (4.6%) share in total exports.

In June alone, the country's trade deficit increased by 27.5% y/y to ALL 26.4bn. Exports grew by 8.2% y/y to ALL 22.5bn and imports rose by 17.9% y/y to ALL 48.9bn.