The economy, underpinned by construction, received 73.5% of domestic investment in 2023

2024-11-21 07:13:00, Ekonomi CNA

The economy, underpinned by construction, received 73.5% of domestic investment

The vast majority of investments in the economy continue to be channeled into the construction sector, especially in housing, even though the country's population has decreased significantly due to high emigration.

Data from the 2023 census showed that 33% of housing in the entire country was empty, but the construction sector and especially housing received 73.5% of domestic investments last year.

According to official data, the weight of investments in the construction sector expanded by 5.7 points between 2018-2023.

INSTAT published the indicator of gross fixed capital formation, which provides data on internal material and non-material investments in the country's economy. This indicator is part of the Gross Domestic Product expenditure and shows how much of the added value in the economy is invested, instead of being consumed.

Historical data shows that the gains that come from GDP growth are largely spent on construction. For example, in 1996, which is the first time that INSTAT reports this data, the change, for a place that has been filled everywhere with concrete, is quite small. In 1996, the weight of construction in domestic investments was 79.7%, while in 2023 it is 73.5%.

Albania emerged from the transition with a young population, full of natural resources. If the investments were channeled to people and to increase the value of resources, Albania would have reached EU standards.

For example, Estonia, which was under Russian occupation until 1991, these 30 years developed an education system and invested in human resources, which made it one of the fastest growing economies in Europe based on technology and innovation. Estonia built one of the best education systems globally and is the most digitized in Europe.

Given the permits granted for high-rise towers earlier this year and the government's capital investment projects, the construction sector will once again be dominant in attracting inward investment.

Experts claim that in the short term, investment in construction can affect the increase in money circulation and the opening of new jobs, but that in the long term it does not add value to the economy, as it does not affect the increase in productivity. and competitiveness.

As it channeled about 70% of profits in construction in the last three decades, our country has remained the country with the lowest per capita income in the region and in Europe.

In Europe and the region, the profits generated by the economy go to innovation and technology, as these sectors generate long-term sustainable returns and high value.

The dependence of the economy on the construction sector in Albania was the highest in Europe in 2023, according to data updated by Eurostat. Nominal spending on construction in relation to Gross Domestic Product (GDP) in 2023 in Albania was 19.1%, from 18.8% last year.

This figure is the highest in Europe, while the European Union average for this indicator is around 11%. The second place after Albania was Romania, with 17.9%, followed by Sweden, with 15.7%./ Monitor Magazine