Albanian businesses begin to feel the consequences of coronary

The impact is coming through two of the most affected states, Italy and China. Italy is Albania's main partner, with 33% of trade volume, where the highest effect may be on exports, while China is the country's third trade partner in terms of imports.

Alban Zuse, president of the Albanian Export Centre, claims Albanian businesses already have consequences from this situation. As far as relations with China are concerned, the biggest damage has been caused to those businesses that have company contracts imported from China. Two months' worth of factories in China are almost closed, and any investment of them is delayed. The factories with China are expected to open in mid-March”, Zuse told Monitor.

INSTA data shows that machinery and electrical equipment and their parts are the most imported group from China, worth over 100m euros in 2019, the monitor writes.

In relation to Europe, especially in the last two weeks where there are increased cases in Italy, this, according to Zuse, has affected the reduction of ties, the movement of entrepreneurs and managers for direct contacts. These are essential, since the business has goods circulation and also people's circulation. So these moves are reduced, which will definitely reflect on business work, as some relationships are necessary for close contacts. The situation with Italy is getting worse. These are the consequences of the moment”, Zuse says.

 Half of exports go to Italy  

Albania has strong trade ties with Italy, especially in terms of exports. According to INSTAT data, to Italy there are 48% of total exports in 2019, where the primary weight of taking textiles and shoes, (about 60% of total), and then “maternity construction and metal”, “Makiner, equipment and spare parts”. Italy ranks as the first partner for imports with 25% of the total purchases we make from all over the world.

The most imported group is <x0-techsteels and shoes”, with 25% of the total coming from Italy, related to the fact that some of them are raw materials and then updated. The mobile and shoe industry is closely linked to the neighbouring state, as about 70% of this group's exports have Italy's destination.

The other most imported groupages from Italy are “Makiner, equipment and spare parts” (20% of total imports from Italy), “Web, tobacco liquor” (12%), “Building and metals” (11.5%).

Albania is the state in the region that has the highest export dependence on a single country, according to an IMF report on the global value chain, published earlier. This makes our country highly dependent on possible developments in the neighbouring state, as Albanian factories work with the message system, conducting only a few processes, such as cutting, ironing. If related Italian companies were to stop activity in Italy due to fear of spreading the virus, it would give influence and lower orders to Albanian partners.

China, third trade partner for imports

Trade with China rose 6.9 percent of the commercial volume during 2019, expanding by a year ago by 0.7 percent. Trade is dominated by imports, which last year were 9.6 times higher than exports.

According to INSTAT data, trade with China over the past year expanded mainly in terms of imports, which marked a value of 59.7 billion dollars (458,4 mn) by 11 percent in proportion to 2018. Imports from China have increased significantly over the past two years following a 2.6% decline in 2017. China is the country's third partner in imports, following Italy and Turkey, with 7.4% of total.

According to INSTAT data, imports are dominated by electrical, hydrosanitary, machines that make up about 40 percent of the total, worth over $23 billion.

Arta and steel articles make up the third most imported group in the country from China, worth $4.1 billion during 2019, up 70% in proportion to the year before.

The clothing is the fourth and fifth largest group of goods imported from China for the Albanian market, worth 5.2 billion dollars by a 17 - percent increase compared to 2018.

Italy endangers recession

Coronervirus' blast has questioned the fate of the Italian economy.

The impact on the economy is expected to be very strong. At the moment, we can count on what may have a negative impact, but we are not able to evaluate and give a prediction, because we still do not know the effects of the measures against the spread of the virus, and we cannot predict its progress in the country, Prime Minister Giseppe Cita has declared.

The month had begun with a totally unexpected and negative surprise in national accounts data: a GDP of 0.3% in the last three months of 2019. And now, after COVID-19, it is expected to close with an even more negative record.

Moodys: Global Crisis Risked

Moody's rating agency has said that if the epidemic turns into pandemic, then a global recession is threatened. “Coronavirus has been a major blow to the Chinese economy, which is now threatening to knock the global economy out of business. A global recession is likely to occur if COVID-19 turned into an pandemic, and the chances for this event will likely be high and increased as cases in Italy and South Korea increase. The American economy is more isolated from the influence of the virus, but it is not immune, and even in this scenario it would probably suffer a drop of”, the agency said.