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From tourism to agriculture and demographic factors, ANALYSIS: The winners and losers of 2024!

2024-12-31 18:49:41Kosova&Bota SHKRUAR NGA REDAKSIA VOX
From tourism to agriculture and demographic factors, ANALYSIS: The winners and
2020-2022

The domestic economy took a breather for the second consecutive year in 2024, leaving behind the difficulties created after the 2019 earthquake and the pandemic that had its effects in 2020-2022 .

Inflation fell to 2% and consumption continued to gradually improve.

The biggest winner of 2024 was tourism.

The country has now become a favorite destination for tourists from all over the world.

For the period January-October, a total of 10.4 million foreign citizens entered the country, a figure that is equal to the entries for the entire year 2023.

Tourism has impacted a chain of sectors, transportation, car rentals, bars and restaurants, hospitality, and many other services, offsetting the negative effect of population decline.

Another "winner" was the local currency, which continued to strengthen, influenced by tourist flows, seasonal effects, and informal income.

We put the winner in quotes, because its effect has been combined, exporters and the tourism sector have lost, those who are paid or have assets in foreign currency (investments, savings, housing) receive money from relatives, as well.

Importers have benefited, indirectly, and consumers, or the state, have had their foreign debt burden eased.

Construction continues to be a winner, remaining one of the leaders of economic growth in 2024, although we are not convinced whether in the long term, this sector will continue to remain so, as a possible bubble could turn the whole situation upside down.

The Albanian population, the biggest loser in 2024. We finally learned the exact population figure.

It came as no surprise that we are down 2.4 million inhabitants, or about 420 thousand fewer compared to the previous Census of 2011.

The signals were there, from the impasse with the labor market, the curbing of consumption, the high numbers of asylum applications and residence permits granted by EU countries to Albanians.

Unfortunately, the emigration trend is continuing, although at a slower pace than in 2022.

Another worrying indicator is the decline in the birth rate.

In the first 6 months of 2024 (when the latest INSTAT data is available), births were 38% lower compared to the same period a decade ago, warning of more losses for the population.

Another loser in 2024 was the industry, which is undergoing transformation, impacted by the loss of the advantage of cheap labor costs.

In the short term, the effect is negative, with many factories, especially in the sector that works with custom-made materials for clothing and footwear, set to close.

In the long term, this development is expected to be positive, as it will encourage a shift to more productive and higher value-added sectors of the economy. Albanian businesses have shown over the years that they know how to adapt quickly.

As always, in recent years, agriculture, although it accounts for a significant share of the Gross Domestic Product (GDP), with almost 20%, has a negligible impact on economic growth, failing to become a winner, despite the opportunities that tourism is giving it, with the latter favoring imports more.

As the year draws to a close, our wish at "Monitor" is that 2025 will be a more prosperous year, with a reflection that the best will come, both from exploiting the growing potential of enterprises, and from the orientation of economic stimulus policies towards sectors with a competitive advantage and a comprehensive impact on the sustainable growth of the economy and the well-being of its citizens!

We must work to prevent losers from becoming destroyers. Businesses will naturally tend to go in the direction of winners.

But this is not enough. As was emphasized by the Nobel Prize winners, it is the quality of institutions that influences economic development, for which policymakers are directly responsible.

However, in these festive times, let's be positive and hope for a better future, which is what this country actually needs the most./ Monitor


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