Steep appreciation in lek causes slump in Albania’s exports

Steep appreciation in lek causes slump in Albania’s exports
Albania's exports fell in monthly and annual terms in August. / Instat
By bne IntelliNews September 19, 2023

Albania reported a sharp fall in exports of 21.9% year on year and by 27.4% compared to the previous month in August, when total exports came in at ALL27bn (€250mn), statistics office Instat announced. 

The statistics office attributed the fall in the value of exports to a combination of the rise of Albania’s currency, the lek, against the euro that has made Albanian exports less competitive, and the fall in prices on world markets. 

“The devaluation of the euro has affected the trade volume, compared to the previous year,” the statement said. “Also, the drop in prices in the world markets of products, which have an impact on the commercial volume, has affected the export/import indicators for the month of August 2023 compared to the previous year.” 

Imports were also down, but by a more modest 15.0% y/y and 4.1% month on month, to ALL68bn. 

Albania typically runs a large trade deficit, which stood at ALL40bn in August. The deficit fell 9.5% y/y but increased 22.9% y/y. 

In the first eight months of 2023, the value of exports was ALL300bn, down 8.6% y/y, while imports came in at ALL577bn down by 5.0%. The trade deficit for the eight-month period was ALL277bn, a fall of 0.8%. 

The biggest y/y decrease in exports was for construction materials and metals, which brought the total down by 14.3 percentage points (pp), followed by textiles and footwear (3.8 pp) and wood manufacturing and articles of paper (1.3 pp). 

On the other hand, a rise in the value of chemical and plastic products exports pushed the total up by 1.1 pp. 

On the import side, the decrease was mainly driven by a fall in the value of minerals, fuels and electricity imports, which accounted for 12.8 pp of the overall decrease. A better year for hydropower meant Albania was able to reduce electricity imports in 2023. 

There were also falls in the value of imports of chemical and plastic products (1.4 pp of the overall decline) and textiles and footwear (1.3 pp). Machinery, equipment and spare parts imports rose, adding 3.7 pp.