Production in crisis, agriculture in contraction for the fifth year, industry for the third

2025-06-27 07:46:00, Ekonomi CNA

Production in crisis, agriculture in contraction for the fifth year, industry

The country's productive sectors, industry and agriculture, the basis of sustainable development and major generators of employment, are in a deep crisis.

Official INSTAT data show that agriculture recorded an annual decline in the first quarter of 2025 by 2.76 percent, while the manufacturing sector by -7.46 percent, the strongest decline since the first quarter of 2020 where movements were blocked by the pandemic.

Agriculture entered its fifth year of decline in 2025, while industry entered its third.

The decline of agriculture and industry in the economy is a negative signal for the country's long-term development, as these two sectors account for a significant portion of the country's production, employment, and trade balance.

Agriculture, forestry and fishing account for about 16% of GDP in Albania and is the largest employer in the country with over 32% of the total by 2023, this percentage is even higher especially in rural areas.

The decline of agriculture is creating greater dependence on food imports, which increases the trade deficit and sensitivity to global price fluctuations.

This development heralds a rise in food prices in the future. For the first time in 2024, Eurostat estimated that average food prices in Albania are higher than the average for EU countries.

Eurostat, for the first time in 2024, food prices in Albania are more expensive than in Europe

More detailed data show that agriculture is on a downward trajectory, mainly due to negative developments in the strong family farms of the livestock sector. In the last decade, the number of animals for milk and meat has almost halved due to the bankruptcy of small farms.

How dairy cows are "disappearing", shrinking by 37% in 10 years, counties with the biggest decline

The decline in the rural population and its aging have led to the extinction of small family farms with livestock. For the same reasons, agricultural production in the field has also declined. Family farms for self-consumption are in constant bankruptcy due to the decline and aging of the rural population.

The industrial sector has also entered a deep crisis with a decline for the fifth consecutive quarter, while the manufacturing industry is in its third year of decline. Industry (manufacturing, energy, mining, etc.) accounts for approximately 10% of GDP, contributing to over 13% of total employment by 2023.

Factories have entered a crisis of no return from the sharp decline of the euro, the increase in domestic costs from the increase in the minimum wage combined with a decline in foreign demand.

The decline in the industry has a domino effect as it is linked to logistics, energy, construction and employment. The industry, especially manufacturing, is more vulnerable to economic crises and global cycles. The strong recovery after the pandemic was replaced by a slowdown and then a sharp decline in 2024.

The decline of agriculture and industry in Albania in recent years has a direct negative impact on economic growth, the well-being of citizens, and the country's ability to attract long-term investments.

Economic growth without foundations in manufacturing and agriculture risks remaining unsustainable and built on unproductive sectors, such as construction or uncontrolled consumption./ Monitor Magazine