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E-TJERA

Economy slows, telecommunications joins agriculture and industry in recession

Politiko 2025-07-04 09:58:13

The growth of Gross Domestic Product in the first quarter of this year slowed to 3.4% in annual terms, where the branch "Public Administration and Defense, Compulsory Social Security; Education; Health and Social Work Activities", marked an annual growth of 19%, reflecting the pre-election activity of the government. Meanwhile, the economy of the ordinary Albanian employed in industry or self-employed in agriculture, suffered another decline.

Data published by the Institute of Statistics shows that three sectors, agriculture, industry and telecommunications, closed 2024 with a decline and this decline continued in 2025. In fact, agriculture has experienced a decline in Gross Domestic Product in real terms for 13 consecutive quarters. The last quarter with growth was the fourth quarter of 2021, while the decline effectively began in 2020.

The agricultural sector is of great social importance for Albania because it officially employs over 30% of the country's entire workforce, or about 300,000 people. Agriculture fell by 2.8% in the first quarter of this year.

Industry is the other sector that has fallen into recession. The decline in this sector began in the first quarter of 2024 and appears to have deepened in the first quarter of this year by 5.7%. The industry sector includes heavy industry activities such as mining or quarrying, electricity, oil, water or waste management as well as the manufacturing industry, which includes activities such as clothing or footwear. Light industry began its decline in the second quarter of 2023 and in the first quarter of this year, the decline appears to have deepened to minus 7.5% in annual terms.

Telecommunications, which includes media, telephone and internet communications, and others, was another sector that appears to have entered a long recession. The last positive quarter for this sector was the first quarter of 2024, while it has been in decline since the second quarter. The decline deepened to minus 3% in annual terms this quarter.

The 3.4% economic growth in the first quarter was helped by growth in the Public Administration sector by 19% and in the real estate sector by 8%. The “Wholesale and retail trade, repair of motor vehicles, transportation and storage, hotels and food services” group, a group that in recent years has been at the forefront of economic growth, especially due to tourism, had a growth of 2.1% in the first quarter of this year, which suggests that the golden days may be over. This is the sector that in 2024 saw growth of over 5% and in 2023 over 9%.

Likewise, the construction sector, which has been a sector with strong growth since the reconstruction process from the 2019 earthquake, grew by 1.8% in the first quarter of this year.

The moral of the story is that growth in the first quarter of this year, besides being lower than last year, when growth was 4%, is unsustainable. Elections cannot be held again and the public sector cannot expand further. According to INSTAT data, public administration contributed 2.24% of the 3.4% that was the total growth./ BIRN