Why consumption has decreased

The low consumption progress wasn’t a temporary phenomenon or by chance. The INSTAT official data show that this is a tendency that had started years ago.

In 2010, the index of retail sales not only did not increase, but it fell, compared to 2009. But which are the causes that make the Albanian families spend less?

The authorities, the government and the Albanian bank, say that the individuals, scared by the crisis, prefer to save money.

This opinion was supported by the increase of bank deposits. But in the last Bank of Albania report, there could be even other causes.

The bank experts have measured for the first time the progress of the available revenues for families in several years.

The numbers show that the Albanian family revenues have increased until 2007, and then started falling even before the crisis started.

The Bank Data show that the real annual revenues for individuals shrank from 7% in 2006, to 5% in 2008, for falling to the minimal level of 3.7% of last year.

The causes

There are some reasons why the revenues of the Albanians have fallen so sharply. The economic shrinking is only one of them.

The available revenues are the revenues that remain to the individuals after the taxes they pay to the government. In 2007, when the revenues received the hardest blow, the Albanian government passed the flat tax, which increased the fiscal burden on most of the individuals from two to three times.

For all citizens who were paid less than 140.000 ALL monthly, the flat tax made them pay more obligations.

Although the government had claimed to increase the wages for neutralizing the flat tax effect, the international crisis kept the negative effect on, together with the fall of revenues.

But besides the tax increase, the available revenues in the economy have decreased even by another factor, which is closely related with the fall of remittances, the profit money transfer abroad, of foreign companies that operate in Albania, which have increased recently.

According to the official data, the emigrants’ remittances fell in 2007 from 925 million EUR to 639 million EUR in 2011. The profits that were companies transferred abroad increased 4 to 8 times more.

For as long that these factors that eat the family revenues will prevail, the consumption growth will be as difficult as trying to leave the crisis behind.

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