The capacity utilization rate increases for services, decreases for industry and construction

2023-11-07 20:42:00, Ekonomi CNA

The capacity utilization rate increases for services, decreases for industry and

Illustrative photo

The capacity utilization rate is increasing for the service sectors, but decreasing for the manufacturing ones.

According to the periodic survey of the Bank of Albania, the capacity utilization rate in the third quarter of the year increased by 1.1 percentage points in the services sector and 3.6 percentage points in the trade sector.

However, this indicator has suffered a significant drop by 4.1 percentage points in the construction sector and by 1.1 percentage points in the industry sector.

The capacity utilization rate seems to have increased especially in the sectors related to tourism and which were more affected by the positive tourist season.

Meanwhile, the construction sector seems to have reached its peak moment, after a rapid growth cycle in the period 2020-2022. The slowdown in economic growth and higher interest rates are expected to bring a brake on the growth rates of this sector. Confidence indicators have also shown a decline in recent months, while expectations for prices

INSTAT data showed that the Gross Domestic Product increased by 3.23% in the second quarter of this year. The rate of growth improved compared to the level of 2.72% of the first quarter, but still so far the Albanian economy is growing at slower rates compared to 2022, when, according to INSTAT's estimates, growth had been more than 4.8%.

At the sectoral level, the growth of the first half of this year was mainly based on construction, real estate and services, while agriculture and industry have so far made a disappointing contribution.

The rapid economic growth in the years that followed the pandemic have narrowed the negative production gap in the economy and the rate of capacity utilization has been increasing. In particular, the rapid growth of tourism in the last two years has supported increased demand in the trade and service sectors.

However, high inflation and higher interest rates are estimated to have already had a significant effect on curbing domestic demand in the economy.

This year, the Bank of Albania has significantly slowed down the increase in interest rates, with only two increases, the last one at the beginning of November.

However, the base rate at the level of 3.25% is still considered low and below the equilibrium level, so it is expected that the increase will continue next year.

Projections for economic growth this year are in the range between 3.5% and 4%, although the first half of this year has brought growth below this range. Expectations are especially high for the third quarter, especially related to the effect of tourism./ Monitor magazine