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75% of investments in the economy go to construction

  • 4/5/2021 5:55 PM
75% of investments in the economy go to construction

Although the world today lives in the age of technology, the investment structure in the Albanian economy still proves an extreme dominance of the classical forms of fixed capital.

According to the latest INSTAT data on the structure of investments, which belong to 2018, for every 100 lek invested in the Albanian economy, 75 lek go to construction.

The dominance of construction in the investment structure has been a constant feature; even until 2009 their share of total investment was more than 80%. Despite a slight decline in the last decade, investment in construction retains an absolute dominance, with occasional distribution of specific weight between the types of construction activity.

For 2018, the branch with the highest weight was residential construction, with 45% of total investments, followed by engineering constructions with 20%. These constructions had reached a very high level in 2017, when they brought about 29% of total investments in the economy. This cycle seems to be in line with the trajectory of large investments in energy and especially the TAP pipeline. In a slightly longer-term perspective, it is striking that engineering constructions usually take on a higher specific weight in election years, as evidenced by the fact that governments have used public investment for electoral gain.

Investments in the function of information technology and communication solutions still have a negligible weight in the total investments made in the Albanian economy. According to INSTAT, for 2018 computer programs and databases accounted for 0.62% of total investments, which represents the highest level ever recorded.

To express the difference in absolute value: in 2018 in Albania were invested about 2.4 billion euros in construction and less than 20 million euros in software.

After construction, machinery and equipment were the second most important group in the investment structure, with 18.1% of the total. The share of investment in machinery and equipment has increased after 2015, probably also related to foreign investment projects in the energy sector. Especially after 2013, there is an increase in the share of transport vehicles, which for 2018 accounted for 5.3% of total investments.

The most important sector in the Albanian economy, agriculture, continues to have a low weight in the structure of investments, even for the period 2017-2018 its contribution fell to less than 1%. Agricultural investments consist mainly of orchards and vineyards, but their weight has decreased after 2015, which can be explained by the change in the form of state subsidies for agriculture. A negative contribution in 2017 and 2018 was given by livestock, which means a decrease in wealth in the form of biological capital of this sector.

/Klara Ruci/