Official data show that the crisis has hit business profits very hard, bringing them down to the lowest levels in history.
A recent poll of the Institution of Statistics shows that the total profit of businesses dropped from 118 billion ALL in 2009, to 96.6 billion ALL in 2012.
The dropped value is 18.1%, but in real terms it is higher, due to the effects coming from inflation.
The dropped profits have made businesses weaker, but they have also created a stalemate that affects the entire economy. Figures show that with these profits rates, it is impossible for businesses to enlarge their activity or make new investments through loans.
This is due to the fact that the profit rate do not justify high interests. According to the Institution of Statistics, the average profit rate for businesses in 2012 was 6.7% of the total expense. This means that for every 100 ALL invested, businesses profit 6.7 ALL.
But if this investment is funded by loans, businesses would have to pay an interest rate that is 30% higher. The conflict between high interest rates and low profits was one of the first signs of the crisis in developed countries. This made central banks in the United States of America and the European Union to undertake aggressive policies for lowering the cost of money in the market, bringing interest rates at almost zero.
The Bank of Albania has followed a similar course, lowering the interest rate to the historic minimum of 3%. But again, it has not been transmitted to the interest rates of loans, the high cost of which, combined with the dropped profits, halts new investments by damaging the economic growth and creation of new jobs.
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