Capacity utilization in industry fell again in the last quarter of 2025

2026-01-12 14:28:00, Ekonomi CNA

The capacity utilization rate in the manufacturing sector suffered a further decline in the last quarter of 2025. According to the periodic survey of the Bank of Albania, businesses in the industrial sector again reported a contraction in production capacity, similar to the third quarter.

Businesses in the construction sector also reported lower capacity utilization. Meanwhile, capacity utilization rates increased in the services and trade sectors.

The capacity utilization rate indicator has generally shown a downward trend over the past year. In general, this is consistent with a slowdown in economic growth rates during 2025. INSTAT data showed that for the third quarter of the year, the Albanian economy grew by 3.75%.

Based on preliminary data so far, for the first nine months of the year, the Albanian economy grew by 3.7%, slowing from the approximately 4% growth in 2024.

The Albanian economy continues to suffer from the decline of its productive sectors. Agriculture and industry have been in decline for several consecutive quarters. This decline was confirmed in the third quarter of 2025, when INSTAT reported that gross output in the agricultural sector fell by 1.7%, while in the industrial sector by 4.8%. The country's economic growth was mainly supported by tourism-related services, construction and by the increase in wages in the public sector.

In a statement to Monitor, the Bank of Albania estimated at the end of 2025 that economic growth was currently occurring close to its assessment of the medium-term potential of this indicator.

However, the Bank of Albania emphasizes that the year 2025 continued to illustrate several structural problems of the Albanian economy. In particular, the sectoral basis of economic growth is not complete while the labor market is showing increasing shortages, as a result of unfavorable demographic trends, emigration, as well as the partial mismatch between the skills required by employers and those available to employees.

In the sectoral analysis, the Bank of Albania underlines that the economic growth of the last two years has reflected the expansion of the construction and services sectors, the latter with an unquestionably primary contribution from tourism revenues, while the industrial and agricultural sectors have marked a decline in activity.

From the Bank of Albania's perspective, this performance reflects both transitory and more stable structural factors.

The transitory factors, according to her, are of a dual nature. The demand for tourism in the region of Albania has seen a rapid increase, an increase which has brought about the expansion of the service and construction sectors, in response to the needs for the expansion of accommodation capacities. In contrast, the demand for industrial goods has been relatively weak and prices are falling, especially in the traditional segments of Albanian exports. Also, the increase in demand in the two above sectors has placed them in very competitive positions in the domestic labor and capital markets, which has further complicated the position of the agricultural and industrial sectors.

However, the Bank of Albania estimates that the maturation of the tourism sector in a medium-term horizon and the better balancing of demand and supply in the economy will be reflected in an easing of these pressures over the next two years.

On the other hand, structural factors reflect a combination of specific problems of the industrial and service sectors, which have as a common denominator the relatively low level of productivity and competitiveness in world markets. Addressing these problems, according to the Bank of Albania, requires attention, both from the private businesses themselves that carry out activities in these sectors, as well as further structural reforms, which help increase the overall productivity of the Albanian economy./ Monitor