2021-2022, in Albania inflation was created by profits, in the Region by salaries

2023-10-30 07:24:00, Ekonomi CNA

2021-2022, in Albania inflation was created by profits, in the Region by

The World Bank analyzes that the strengthening of the exchange rate in Albania has helped to reduce inflation, but more complete data show that the increase in profits was an important driver of inflation in some countries of the Western Balkans, and in some countries it was wages. incentive.

Profits are calculated as the difference between gross value added and labor cost. The World Bank shows that earnings became the biggest driver of domestic inflation in 2021 in Albania, B&H and Montenegro, and in 2022 in North Macedonia, while wage growth was the driver of inflation in Serbia and Montenegro. Zi by the beginning of 2022, and in North Macedonia and B&H by the end of 2022.

In Albania, earnings rose from mid-2021, contributing an average of 2.6 percentage points to inflation that year, and with an extraordinary impact in 2022, pushing inflation by 7.7%. This is because the share of the self-employed who earn mixed income that is counted as profit has a greater weight in inflation.

On the other hand, the lower contribution of wages (also due to informality) limits the effect of wages on inflation in Albania.

In Bosnia, earnings were also the main driver of inflation in 2021 and remained strong throughout 2022, contributing about 5.3 percentage points to inflation.

A gradual increase in wages increased their contribution to inflation from 2022 and were the main driver of inflation in the second half of 2022.

In North Macedonia, the role of earnings in driving inflation remained relatively low in 2021, with an average contribution of around 0.7 percentage points.

However, in 2022, they contributed 5.7 percentage points to inflation. The contribution of wages became slightly larger than that of earnings in the second half of 2022.

In Montenegro, earnings pushed inflation up by an average of 3.7 percentage points in 2021, but in 2022 this trend was interrupted by increases in employment and the minimum wage, which increased labor costs. Since then, wages have become a major contributor to inflation.

Finally, net taxes also contributed to an increase in inflation in 2022, with the exception of North Macedonia. In 2022, net taxes in North Macedonia reduced inflation by 5 percentage points.

This happened due to a sharp increase in subsidies for basket products. This weight changed in 2023 when the government of North Macedonia reduced subsidies to the economy.

Elsewhere, net taxes have had little pressure. The World Bank analyzes that inflationary pressures are decreasing throughout the Western Balkans, but vigilance is still needed./ Monitor Magazine