Home Page
 
News 11 Jul 12

Albania Eyes New Markets as Greek Crisis Hits Home

Businesses affected by the economic downturn in Greece are seeking new markets in the West, hoping that a cheap and qualified labour force will draw fresh clients.

Besar Likmeta
BIRN
Gjirokastra
Mustafa Devolli | Photo by : Telnis Skuqi

Mustafa Devolli, head of the chamber of commerce in the southern town of Gjirokastra, is well versed on the whirlwind of political and economic developments buffeting Greece.

The strong showing of the right-wing, anti-immigrant Golden Dawn party and the radical left Syriza party in the repeat Greek elections has him worried.

“We have followed the news from Greece with indignation because we work with Greek partners and what happens there affects us here,” Devolli told Balkan Insight.     

Only a few months ago, Devolli owned a garment factory in Gjirokastra, producing military uniforms for the Greek army. However, as the debt crisis hit Albania’s southern neighbour, its orders and payments for contracts dried up, forcing him to close.

“As a border town, the effect of the Greek crisis in Gjirokastra has been direct,” explains Devolli, who employed between 60 and 70 local workers since 1993.

“Most garment companies here have closed and only one remains open, which has left 400 workers jobless,” he added.

Although the debt crisis has strongly affected industrial output in the south of Albania, where the local economy is intertwined with Greece, local businesses remain bullish that they will find new markets.

Workers fold paper bags at the recently opened Kastro-Baks plant in Gjirokastra | Photo by : Telnis Skuqi

Greece is the Balkan region's largest economy and has been an important investor in Southeast Europe over the past decade.

But the debt crisis has forced Athens to impose harsh austerity measures on its public sector, including tax hikes, which have been felt beyond its boarders.

A report published in May by the European Bank of Reconstruction and Development, EBRD, said the recovery of the economies in Southeast Europe from the global economic crisis has been limited by the onset of the eurozone crisis as well as by the region’s links with the Greek economy.

“Albania’s strong trade, investment and remittance ties to these countries are likely to continue to hold back growth in the coming year, while public debt is close to the statutory limit of 60 per cent of GDP, limiting the room for fiscal manoeuvre,” the EBRD noted.

Data published on Monday by the Albanian National Institute of Statistics, INSTAT, show the Albanian economy contracted in the first quarter of this year - a downturn blamed mainly on the eurozone crisis.

Matilda Xarba | Photo by : Telnis Skuqi

The worst performing sector of the economy was industry, whose activity shrank by 19.6 per cent, compared with the same period in 2011.

Gjirokastra has a tradition in the garment industry dating back to the Communist era and not all the news from its manufacturing base is gloomy.

The cheap and qualified workforce convinced a Greek company, Kastro-Baks, to open a manufacturing plant for paper bags in January 2011, even while other factories were closing.

“In Gjirokastra many companies have closed because the crisis, but the investor in our case was attracted by the cheap labour force,” said Matilda Xarba, the financial officer of the company that now employee 35 workers, mostly women.

“We weren’t hit as bad by the crisis,” Xarba explained, adding that despite the economic downturn in Greece, a good product at the right price will always sell.

Devolli, meanwhile, is not confident that demand from Greece will bounce back and has set his sights on the West to fill the gap.

“Six businesses have currently shut down here and with the problems in Greece we are striving to find new markets,” he said, explaining that he is currently negotiating a contract with an Italian company in Milan.

“We are looking for new western partners because the Greeks are done,” he added.

Talk about it!

blog comments powered by Disqus