The foreign trade of Albania after the global economic crisis: Problems and challenges

• Author: Alketa Vangjeli - Albana Madhi
• Position: 'Aleksander Xhuvani' University of Elbasan, Faculty of Economy, Department of Economics - 'Aleksander Xhuvani' University of Elbasan, Faculty of Economy, Department of Administration ? Business
• Pages: 302-309

ISSN 2410-759X Balkan Journal of Interdisciplinary Research Special Issue No 1

Acces online at www.iipccl.org IIPCCL Publishing, Tirana-Albania June 2015

302

e foreign trade of Albania aer the global economic crisis:

Problems and challenges

Prof. Ass. Dr. Alketa VANGJELI

“Aleksander Xhuvani” University of Elbasan

Faculty of Economy

Department of Economics

Dr. Albana MADHI

“Aleksander Xhuvani” University of Elbasan

Faculty of Economy

Department of Administration – Business

Abstract

e outbreak of the global nancial crisis, uctuations in oil, food, and other commodity prices,

and the economic slowdown of the major trading partners in 2008 and early 2009 has brought

about one of the most dicult challenges to the transition economies of Balkan. Foreign trade,

including both exports and imports, severely declined, leading to serious contraction of economic

growth.

Before the crisis, Albania enjoyed strong growth with comparatively external vulnerabilities.

Sustained macroeconomic stability, a simplication of the tax system, and structural reforms

helped boost investment and trade. But, despite Albania’s limited integration into global nancial

markets, the crisis was transmitted to its economy via a number of channels. One of the channels

is the decline of foreign trade.

is paper aims to explore the situation of the foreign trade of Albania during and aer the

economic crisis, clarify the negative eects transmission mechanisms, identify the economic range

of problems caused by this impact, and oer suggestions on policies intended to protect the most

aected groups. It shows that the drop in macroeconomic gures such as the employment rate,

private consumption, remittances and exports are clear consequences of the fact the small-open

Albanian economy has been directly aected by the crisis with delayed impact on the real economy,

compared to the rest of the region.

e paper oers an analytical basis to assist the policymakers, so that the public debate can be

focused on nding alternatives and specic interventions with the aim of alleviating the direct

economic and social consequences of the global economic crisis.

Key words: Foreign trade, global economic crisis, transition economies, structural reforms, economic

impacts.

Introduction

e recent global economic crisis inuenced the developing and transition economies

by shaking the factors and the equilibriums which have supported the economic growth.

For the Western Balkan countries (WB), the global nancial crisis was experienced as

a huge external shock. As the WB banking systems were not directly exposed to ‘toxic

assets’, the crisis was transmitted to the region through a number of indirect channels.

ese included a contraction of international trade, a sudden stop to credit growth, a

rapid fall in inows of foreign direct investment (FDI), and a rapid fall in remittances

from migrant workers, each reecting the impact of the global crisis in nancial markets,