The decline of agriculture and industry is not stopping, growth is coming from unstable sectors

2025-12-29 07:14:36, Ekonomi CNA

The decline of agriculture and industry is not stopping, growth is coming from

The way in which Gross Domestic Product (GDP) is growing shows that the economy is relying less and less on traditional manufacturing sectors and more and more on services, while agriculture and industry continue to make a negative contribution to economic expansion.

The latest data from INSTAT show that the economy grew by 3.75% in the third quarter compared to the same period last year, while the agricultural sector fell by -1.73% in the same period and industry fell by -4.7%.

Agriculture is showing a continuous decline in value added since 2021, reflecting structural problems related to land fragmentation, low productivity, lack of subsidies, and cost pressures.

At the same time, the manufacturing industry is closing in on its third year of decline.

Both productive sectors, such as agriculture and industry, have had a significant impact on employment and the total economy.

Both agriculture and industry together contributed only 23% of GDP in 2024 from 27.3% which was their share in 2019.

This performance shows that economic expansion is not being accompanied by a strengthening of production capacities. The extractive and processing industry is being affected by both weak external demand and higher domestic costs and labor shortages.

Meanwhile, economic growth is being kept alive mainly by service sectors, such as public administration, professional and financial activities, and some segments of trade and tourism-related services.

According to experts, this makes growth less balanced and more vulnerable to shocks, as it lacks support from sectors that create long-term added value and are the basis of exports.

The latest GDP data show that growth is resting on fragile foundations. The decline in agriculture and the weakening of industry raise questions about the quality of growth and the economy's ability to generate sustainable development and productive employment.

The decline in output also means that the economy is losing its ability to compete in foreign markets. Exports have fallen by an annualized rate of about 7% in the 11 months and remain concentrated in low-value-added products, making growth more dependent on imports and external flows, such as remittances and tourism. This widens the trade deficit and makes the economy more exposed to external shocks.

On the other hand, the manufacturing sector usually offers more stable jobs and the potential for skill growth. As production declines, employment shifts towards more informal or low-productivity activities./ Monitor.al