Business, Consumer Confidence in Economy Improves
Albanian Daily News
Published January 17, 2017

The economic sentiment
indicator (ESI) in Albania continued an upward trend in the fourth quarter of
2016, increasing by 9.4 points compared to the third quarter and around 18.6
points above the long-term average, Bank of Albania said in its latest Business
and Consumer Confidence Survey on Monday.

According to the Survey findings, the
ESI upward trend reflects an improved confidence in the services and
construction sectors, as well as the improved consumer confidence. According to
Central Bank, confidence indicators in industry and trade fell slightly
compared to the third quarter, with the Industry Confidence Indicator (ICI)
falling by 3.3 percentage points in the final quarter of 2016.

According to the Survey findings,
businesses reported that they had used their production capacities at the level
of 73.4%, or 3.6 percentage points lower than the previous quarter, but
remaining above the historical average of 72.4%. Meanwhile, the balance of the
firms' financial situation has improved.

Other balances related to the employment
and the financial situation continued to increase, whilst the balance of
employment expectations for the next quarter was downward.

BoA statistics also showed a 4.8
percentage point increase in Consumer Confidence Indicator (CCI) during the
fourth quarter of 2016. As a result, CCI stands 3.0 percentage points above its
historic average. All four balances contributed to the upward side of the CCI'S
value during 2016 Q4: - major purchases (+7.4); general economic situation
expected in the country (+5.5 percentage points); expected financial situation
of households (+4.5 percentage points); income and spending situation (+1.7
percentage points).

Other balances that increased during
2016 Q4 are: major purchases in the future, and current and expected saving

Industry Confidence Indicator (ICI) fell
by 3.3 percentage points in 2016 Q4. However, the indicator remains 8.4
percentage points above the historical average (Chart 2). The balance of
production and order books fell by 6.3 and 4.5 percentage points, respectively,
thus determining the ICI's direction.

Meanwhile, the decline by 0.9 percentage
point of the other component balance, stocks of inventories, led to the
improvement of ICI.

The Construction Confidence Indicator
(CCI) continued its upward trend during 2016 Q4, resulting in about 2.5
percentage points above the level in the past quarter and 7.2 percentage points
above the historical average.

The improved confidence in this sector
is attributable to the improvement of the two balances: construction activity
and order books, which increased by 4.3 and 0.6 percentage points,

The Services Confidence Indicator (SCI)
continued its upward trend in 2016 Q4 (+13.2 percentage points). Also, firms
operating in the services sector assess that the balances of financial
situation and employment have increased. Expectations for demand and employment
for the upcoming quarter increased during the fourth quarter. Capacity
utilization rate is estimated on average at 80.6%, or 2.0 percentage points
higher than in the previous quarter and 4.1 percentage points above the
historical average.

Trade Confidence Indicator (TCI) fell by
1.6 percentage points during 2016 Q4, but remains above its historical level by
6.3 percentage points (Chart 5). This performance was determined mainly by the decline
of one of its balances: employment expectation for the next quarter by 3.4
percentage points. The Consumer Confidence Indicator (CCI) improved its
dynamics during 2016 Q4, increasing by 4.8 percentage points. 

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