The winners and losers of 2024

2024-12-31 18:15:00, Ekonomi CNA

The domestic economy took a breather for the second year in a row in 2024, leaving behind the difficulties created after the earthquake of 2019 and the pandemic that gave effects in 2020-2022. Inflation dropped to 2% levels and consumption continued to improve gradually.

The biggest winner of 2024 was tourism. The country has already become a favorite destination for tourists from all over the world.

For the period January-October, a total of 10.4 million foreign nationals entered the country, a figure that is equal to the arrivals for the entire year 2023. Tourism has affected a chain of sectors, transport, car rental, bars and restaurants, hotels and many services others by amortizing the negative effect of the shrinking population.

Another "winner" was the local currency, which continued to strengthen, influenced by tourist flows, seasonal effects, but also informal entries.

We have put the winner in quotes, because its effect has been combined, exporters and the tourism sector have lost, those who are paid or have assets in foreign currency (investments, savings, housing) receive money from relatives, as well. Importers have won, indirectly, and consumers, or the state, have been relieved of the burden of foreign debt.

Construction continues to be a winner, remaining one of the leaders of economic growth in 2024, although we are not convinced that in the long term, this sector will continue to remain so, as a possible bubble could turn the whole situation upside down .

Albanian population, the biggest loser in 2024. We finally learned the exact population figure. It did not come as a surprise that we have 2.4 million inhabitants left, or about 420 thousand less compared to the previous Census of 2011.

The signals were there, from the stalemate with the labor market, the curbing of consumption, the high numbers of applications for asylum and residence permits granted by EU countries to Albanians. Unfortunately, the emigration trend is continuing, albeit at a slower pace than in 2022.

Another worrying indicator is the decline in the birth rate. In the first 6 months of 2024 (when the latest INSTAT data are available), births were 38% lower compared to the same period a decade ago, foreshadowing further population losses.

Another loser in 2024 was the industry, which is undergoing transformation, affected by the loss of the advantage of cheap labor costs. In the short term, the effect is negative, with many factories, especially in the sector that works with custom material for clothing and shoes, to be closed. In the long term, this development is expected to be positive, as it will encourage the transition to more productive sectors with higher added value of the economy. Albanian businesses have shown over the years that they know how to adapt quickly.

As always, in these last years, agriculture, although it occupies a significant weight in the size of the Gross Domestic Product (GDP), with almost 20%, has a negligible impact on the growth of the economy, failing to turn into a winner, regardless of the chances that tourism is giving, with the latter favoring imports more.

As the year is closing, our wish at "Monitor" is that the year 2025 will be better, with a reflection that the best will come, both from the use of the growing potential of enterprises, as well as from the orientation of policies encouraging economy towards sectors with a competitive advantage and a comprehensive impact on the sustainable growth of the economy and the well-being of its citizens!

Work must be done so that losers do not turn into destroyers. Businesses will naturally tend to go in the direction of the winners. But this is not enough. As it was emphasized by the winners of the "Nobel" prize, it is the quality of institutions that affects economic development, for which policymakers are directly responsible.

Anyway, in these festive times, let's be positive and hope for a better future, which is what this country actually needs the most./ Monitor Magazine