The impact of the euro on the decline of Albanian exports

2023-12-10 19:07:49, Ekonomi CNA

The chairman of the association of exporters of Albania, Edvin Prençi, shows that this year the drop in the level of the euro currency by about 16 percent against the Albanian lek has directly affected the drop in exports. He adds that, since 2016 until today, the euro has depreciated by 35 percent and this reflects on businesses that have contracts in the European currency. According to official data from the Institute of Statistics, the ten months of this year marked a decrease in exports to the extent of minus 8.6 percent compared to the same period a year ago. The biggest decrease is in textile and footwear, wood and paper products as well as chemical and plastic products.

"I believe that the euro exchange rate is an economic problem for all Albanian exporters. A fluctuation so scary and so drastic has definitely brought a stalemate and lost the competitiveness of all exporting businesses. We have a fluctuation of around 16-20% of the exchange rate and this leads to the limit of survival of many businesses. But, on the other hand, it has influenced the decline of orders coming from other countries, losing competitiveness".

The fashion sector alone, which works with material ordered from abroad, has about 75 thousand employees and accounts for about 40 percent of Albanian exports. The administrator of the shoe production company "FG WALK", Anila Golemi, says that due to the large devaluation of the euro, Albanian companies, which work with custom materials, are becoming less and less competitive in foreign markets.

“We cannot maintain financial stability and ongoing operations, we cannot reward or increase employee payments, and we become less competitive. This locally but definitely also in the international market. In the shoe production sector, we have noticed that many companies, which have been working for decades in Albania, are moving towards more competitive markets".

The impact of the euro on the decline of Albanian exports

If the decline in exports will continue during the next year, says Mr. Prençi, this will be accompanied by social effects such as the reduction of jobs and the closure of less competitive businesses.

"Beyond the economic impact, the most frightening thing is that we are heading towards a social impact with people who will leave the work system, which is difficult to integrate them into other sectors".

Representatives of the fashion business have different opinions regarding the exit from the difficult situation in which they have fallen in recent months. Their contracts with foreign companies are in euros, while workers' salaries and internal expenses are in the local currency.

After more than 30 years since their creation, businesses that work with customer material for the most popular European companies are already in danger of closing their cycle, which is pushing them to look for other ways to become competitive in the markets of foreign./ VOA