The economic sentiment indicator ended 2024 in decline. According to the Bank of Albania, it fell by 3.8 points in December. However, its current level is more than 8 percentage points above the historical average.

The indicator's decline in December was influenced by the weakening of all confidence indicators of business sectors. The construction and services sectors recorded the highest decline. The fall in confidence among consumers affected this decline as well, though to a lower extent.

The industry confidence indicator was down by 1 percentage point in December 2024, continuing its declining trend for the third month in a row. The current level of the industry confidence indicator remained around 8.5 pps above the historical average. The indicator dropped due to the less-than-positive appraisals of businesses on current industrial production. Expectations for selling prices in the future were revised upwards compared to the previous month, as were employment expectations in the future for this sector.

Meanwhile, the construction confidence indicator declined by 5.5 pps in December. This indicator continues to stay around 22 points above the historical average. This fall was determined by the decline of businesses’ assessments on both the current construction activity and order books. In addition, expectations for prices in the future have gone up, whereas expectations for employment have deteriorated somewhat.

Furthermore, the services confidence indicator contracted by 5.5 pps in December. Despite the monthly fluctuations, the indicator stands around 16 percentage points above the historical average. The service indicator declined as a result of the less optimistic appraisals of services-related businesses on the current performance of their activity and the current level of demand.

Meanwhile, expectations for employment and prices in the future have been revised upwards. The trade confidence indicator inched down by 3.3 pps in December, after increasing by 2.5 pps during the other two months of this quarter. The current level of the trade confidence indicator stands around 11 points above the historical average. The declining appraisals on the current business performance and employment expectations in the future underpinned the current value of the trade confidence indicator. Businesses operating in the trade sector have assessed their expectations for future prices upwards.

On the other hand, the consumer confidence indicator declined by 1.7 pps. The consumer indicator stands 2.4 pps above the historical average. Consumers assessed downwards the future economic situation in Albania. Their expectations for both current and future major purchases fell during December. Expectations for the overall prices in the future have been revised downwards. Indicators of quarterly frequency show that the financial situation of businesses improved slightly in the fourth quarter, resulting in higher historical values for the sectors of industry and construction. Their capacity utilization rate has increased during this quarter as compared to the previous quarter. Both indicators stand significantly above their respective historical averages.