April 24, 2024
Economy

Economy slowed down in 2023, consumption was not aided by tourism


The Albanian economy grew at a slow pace in 2023, despite acceleration in the second half of the year.

With the assessment of the fourth quarter, the Institute of Statistics (INSTAT) provides a preliminary estimation of GDP for 2023, which, based on quarterly estimates, recorded an increase of 3.44% compared to 2022.

In comparison to 2022, when GDP grew by 4.85%, the increase is 1.42 percentage points lower.

Construction, real estate assets, and public administration were the largest contributors to growth in 2023, while the industry and agriculture experienced negative trends. Meanwhile, consumption was not boosted by the historically good tourism year, during which more than 10 million foreign nationals visited the country.

Population consumption increased by only 2.96% in 2023, down from 7.37% the previous year, marking the lowest levels since the pandemic. In the second half of the year, when tourism peaked, consumption increased at very slow rates (2.21% in the third quarter and 1.55% in the fourth).

Economy accelerated during the fourth quarter, but consumption reached its lowest levels since the pandemic

The economy showed signs of acceleration in the fourth quarter of the year, growing by 3.8% on an annual basis, according to INSTAT data. However, growth came from the construction sector and public administration, which in the last month of the year allocated around 40% of the capital spending funds it had planned for the entire year.

On the other hand, consumption, an important element of economic influence, significantly slowed in the fourth quarter, reflecting the effects of emigration as well as the unequal distribution of economic growth. Consumption increased by only 1.55% in the fourth quarter, down from 2.22% in the third, reaching the lowest levels since the pandemic.

Meanwhile, INSTAT has also revised the economic growth indicator for the third quarter upward, from 3.46 in the previous publication to 3.83% in the latest report, while the second quarter has been revised downward, to 3.29 from 3.38 in the previous publication.

According to INSTAT, construction and public administration influenced the growth in the fourth quarter.

The two most important sectors for the economy, agriculture and industry, experienced declines.

The group Agriculture, Forestry and Fishing contributed negatively with -0.72 percentage points, Industry, Energy and Water with -0.23 percentage points. Net taxes on products contributed positively by +0.27 percentage points.

According to INSTAT, Agricultural, Forestry and Fishing activities experienced a decline of 3.07%. Industrial, Energy, and Water activity decreased by 2.03%. Construction activity increased by 10.80%.

Despite the extended tourist season, its impact on trade, transport, and accommodation has been minimal. INSTAT reported that the group of activities Trade, Transport, Accommodation and Food Service increased by 0.38%.

The group of Information and Communication activities showed an increase of 8.81%. Financial and Insurance Activity increased by 7.50%. Non-durable assets activity increased by 10.33%. The group of Professional activities and Administrative services showed an increase of 10.78%.

The group of Public Administration, Education, and Health activities showed an increase of 8.82%. The group of Arts, entertainment, and leisure activities, other service activities increased by 21.42%.





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