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August tourist season "cools" the economy, business confidence in industry and services falls, construction weak

2025-09-01 17:35:00, Ekonomi CNA

August tourist season "cools" the economy, business confidence in

Although August is supposed to be a hot month for the economy due to the influx of foreigners and immigrants, data from businesses shows a different situation even for the services sector, which is directly linked to tourism.

Services businesses reported lower assessments of their current activity performance and current demand levels. The construction sector, which has led growth in recent years, is not showing a positive outlook either. Industry continues to be in declining territory. Only trade was positive, reporting an increase in activity, the only sector that seems to be positively affected by tourism.

The Bank of Albania reported that the economic sentiment indicator (ESI) contracted by 0.8 points in August. However, the current level of the ESI remains around 8 percentage points above the historical average (Chart 1). The decline in the ESI this month was influenced by the weakening of confidence indicators in the industry, construction and services sectors. To a lesser extent, the decline in consumer confidence also contributed. On the other hand, confidence in the trade sector marked a strong increase this month.

The Industrial Confidence Index (ICI) fell by around 4 percentage points in August, but still remained around 2 percentage points above the historical average. The decline in the ICI was influenced by less positive business assessments of industrial production, as well as less optimistic expectations for export orders. Expectations for future prices have been revised upwards compared to the previous month. Meanwhile, business expectations for future employment in this sector have registered a significant decline.

The Construction Confidence Indicator (CCI) fell by around 2 percentage points in August. Its level remains around 12 percentage points above the historical average. The decline in CCI was driven by declining estimates of current construction activity and those for new orders. As for expectations, those for future prices and employment are on the rise.

The Services Confidence Indicator (SCI) contracted by 2.1 percentage points in August. Despite monthly fluctuations, the indicator level remains 15 percentage points above the historical average. The decline in SCI was contributed by lower assessments by businesses about the current performance of their activity and the current level of demand. Employment expectations in this sector have also been revised downwards. Meanwhile, expectations for future price developments have been revised upwards.

The Trade Confidence Indicator (TBT) rose by 5.4 percentage points in August, following a significant increase in July. The TBT currently stands at around 14 percentage points above its historical average. The current TBT reading was driven mainly by rising assessments of current business performance and expectations for future employment. Future prices were seen to remain broadly unchanged from the previous month.

The Consumer Confidence Index (CBI) recorded a slight decline of 0.5 percentage points. This level is 0.5 percentage points above the historical average. Consumers assessed both the country's economic situation and their future financial situation with a decline. Their assessment of current purchases in large amounts fell in August. Expectations for the general level of prices in the future have been revised slightly downwards./ Monitor.al