What Does the Greek Monetary Crisis Mean for Albania?

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The Greek monetary crisis has dominated the news — worldwide — over the last few weeks.  Given Albania’s proximity to Greece and the interdependence of their economies, I have wanted to post about the situation but haven’t had time to write it up in a way that would do justice to it.  (That’s a fancy way of saying that my lack of facility with topics macroeconomic severely constrains my ability to explain this macroeconomic mess!).

During this period of avoidance, my friend, fellow PCV and economist-by-training, Will, has written a great blog piece that lays out the basics of the situation in a super-simplified way and then explains how this crisis is bleeding over into the economy of Albania.

…numbers vary widely, but estimates put the number of Albanians in Greece between 250,000 and 1.2 million. Most, if not all, of these people are supporting families back home, living meagerly while in Greece. They are working there because they perceive the opportunity for work and income in Greece as greater than in their home country. So what does the current crisis, and potential “Grexit” mean for Albania?

Will has given me permission to link my blog to his post.  In it, he discusses “remittances,” which are an important concept in understanding the Albanian economy.  Here’s some background:  Officially, the unemployment rate in Albania is 17%, but the consensus is that it’s actually closer to 30%.  Part of the gap can be accounted for by the general unreliability of Albanian stats, part of it is about how unemployment is measured, and part of it is that Albanians working abroad because they are unemployed here are not counted as unemployed! These migrants, many of whom are in Greece, support their families by sending money back home (“remittances”).  Remittances account for ~15% of GDP and play a role in the country’s economic growth, which is about 2 percent per year.

Click here to read Will’s blog post, “Free Coffee: Greek Crisis and Theories of Impact on Albania” — I think you’ll enjoy it.

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