The upheaval from tourism, for the first time Albania has a positive external balance

2023-12-12 07:36:00, Ekonomi CNA

The upheaval from tourism, for the first time Albania has a positive external

Illustrative photo

For the first time in its history as an open economy, Albania has a positive external balance.

According to data from the Bank of Albania, in the third quarter of 2023 the current account balance was positive in the amount of 354 million euros, compared to a deficit of 145 million euros that was recorded in the same period a year ago.

The current account surplus for the third quarter even exceeded the deficit accumulated in the first two quarters of the year. This caused the current account balance to be positive in the amount of 28 million euros for the 9-month period.

At least since the opening of the Albanian economy, this is the first time that Albania has a progressive positive current account balance.

Tourism has made the main contribution to the reversal of the country's external position. Travel revenue for the third quarter hit a record 1.66 billion euros, up 56.5% compared to the same period last year.

While net income, deducting outflows, also marked a record value of 885 million euros, increasing by 75% compared to last year. For the 9th month of 2023, the net income from tourism reached 1.46 billion euros, an annual increase of 73%.

In addition to tourism, in general the services sector continues to make a high contribution to the growth of the country's exports, starting with fashion services.

According to the Bank of Albania, physical input processing services owned by others for the third quarter brought in 198 million euros, up 49% compared to a year ago. For the entire 9-month period, fashion brought net income to the economy in the amount of 592 million euros, an increase of 25% compared to the previous year.

Remittances continue to make a positive contribution to the current account balance. For the 9-month period, immigrants' remittances reached the value of 677 million euros, increasing by 14% compared to a year ago.

The new waves of Albanian emigration in recent years have recovered remittances, positively affecting the country's current account balance.

High inflation and the fall of the euro during the last two years may also have fueled the increase in remittances, to enable the preservation of the purchasing power of households dependent on them.

The above items made it possible to overcome the trade deficit in goods, which, however, for the 9-month period continued to grow, by 9.5% compared to the same period a year ago.

The significant improvement of the Balance of Payments largely explains the strengthening of the lek in the foreign exchange rate. During the summer of this year, the euro dropped very close to the limit of 100 lek, depreciating by more than 14% on an annual basis. The decline of the euro is continuing during the last quarter. On December 11, the euro was exchanged at 101.7 ALL, down by more than 13% compared to the same period a year ago.

If we add to the effect of the improvement of the current account balance the ever-increasing flows of the financial account, mainly due to the increase in foreign direct investments, the conclusion is that this year more foreign currency has entered the Albanian economy than it has left. affecting the devaluation of the euro and the strengthening of the lek.

However, the drop in the exchange rate is believed to have been further fueled by the restrictive fiscal policy of the Albanian government and the budget surplus at the highest historical levels./ Monitor Magazine