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Albania

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Economic and political overview

Economic Overview

Albania is considered a transition economy, not highly integrated into global capital flows but demonstrating strong economic performance. The country’s economy has performed strongly in recent years, driven by prudent macroeconomic policies and a thriving tourism sector, with output now well above pre-pandemic levels. After growing by 3.9% in 2023, Albania's real GDP is expected to average around 3.5% annually in 2024-2029, driven by domestic consumption, tourism, and construction (IMF). In 2024, the country recorded one of the highest growth rates in Europe, at an estimated 3.6%, as domestic demand was supported by wage growth and construction activity. For 2025–2026, GDP growth is forecast at around 3.5%, slightly moderating but staying strong. Slower employment growth may dampen private consumption, while public consumption is expected to decelerate.

Albania’s fiscal position improved in 2023, with the general government deficit falling to 1.3% of GDP. In the first nine months of 2024, revenues rose by about 10% y-o-y, aligning with the budget plan, while public expenditure, especially capital spending, was underexecuted. As a result, the budget was in surplus through September. However, for 2024 as a whole, the deficit was estimated at 2.3% of GDP due to higher spending on public wages, social insurance, interest costs, and accelerated public investment. In 2025, the deficit is expected to stay at a similar level before narrowing slightly to 2% of GDP in 2026. The primary balance is set to remain in surplus, consistent with the national fiscal rule. Government debt fell below 60% of GDP in 2023, supported by a positive primary balance, a favourable snowball effect, and an upward revision of nominal GDP. The debt ratio is projected to decline more gradually through 2026, driven by nominal GDP growth (EU Commission). Inflation eased significantly in 2024, averaging 2.2%, down from 4.8% in 2023. This sharp decline was driven by lower imported costs, supported by a strong exchange rate and falling prices in Albania’s trading partners. At the same time, domestic pressures persist due to high demand, rising wages, and increasing production costs. Inflation is expected to rise slightly in the coming years.

The unemployment rate was estimated at around 10.7% in 2024 by the IMF and is expected to remain relatively stable in the short term. Despite labour market improvements, emigration remains a challenge. Preliminary results from the 2023 Population and Housing Census, released in June 2024, show Albania’s population declined by 14%, from 2.8 million in 2011 to 2.4 million in 2023, reducing the working-age population. Moreover, a large share of GDP (estimated at around 50%) is still accounted for by the informal economy, which hinders the economic reform agenda.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 22.8226.1327.9929.9231.85
GDP (Constant Prices, Annual % Change) 3.53.33.43.53.5
GDP per Capita (USD) 8,2999,59810,38611,21111,938
General Government Gross Debt (in % of GDP) 59.858.357.056.255.5
Inflation Rate (%) 4.82.22.42.63.0
Unemployment Rate (% of the Labour Force) 10.710.710.710.710.7
Current Account (billions USD) -0.29-0.21-0.28-0.36-0.22
Current Account (in % of GDP) -1.2-0.8-1.0-1.2-0.7

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Agriculture is a pivotal sector for the Albanian economy. It contributes 16.2% of the GDP and employs 34.9% of the workforce (World Bank, latest data available). Agricultural production concentrates on wheat, corn, oats, potatoes, vegetables, olives, tobacco, fruits, sugar beets, vines, livestock farming and dairy products. The agriculture sector in Albania suffers from a lack of modern equipment, highly fragmented land ownership and limited area of cultivation, all of which lead to relatively low productivity. The productive capacity of the national agriculture sector meets only one-third of the domestic demand for food and feed (World Bank); 42.8% of its territory is classified as agricultural land (1,17 million ha) and 28.7% are forests; source: FAO). However, it should be noted that agricultural production is higher than its share of the GDP: a large part of the produce is in fact consumed by the farmers themselves and therefore is not marketed. Data from the Minister of Agriculture and Rural Development show that the country’s agricultural exports increased 21% y-o-y in 2024. The government's objective is to reach USD 1 billion in exports by 2030.

The industrial sector accounts for 23% of the country's GDP and employs 21.2% of the active population. It is characterized by a diverse range of industries, with key sectors including textiles and clothing, minerals, energy, and food processing. Textiles and clothing production has historically been significant contributors to the economy, leveraging the country's skilled workforce and competitive labour costs. Albania also possesses substantial mineral resources, particularly chromium, which has been a cornerstone of its industrial output. Energy production, notably hydroelectric power, holds considerable potential for growth and investment. Additionally, food processing represents a growing sector, benefiting from Albania's rich agricultural resources. Emerging industries include technology and manufacturing, as the country seeks to diversify its industrial base and attract foreign investment. The manufacturing sector’s value-added is estimated to contribute to nearly 7% of the country’s GDP (World Bank).

The services sector represents 48% of the GDP, employing around 43.9% of the workforce. Tourism is an important sector of the economy: after being severely affected by the COVID-19 pandemic, foreign tourist arrivals to Albania rose to over 11.7 million in 2024 (+15.2% year-on-year – Ministry of Tourism). According to the latest figures by the European Banking Federation, the structure of the banking and financial system consists of 11 banks (five of which have Albanian capital and six with foreign capital), 40 non-bank financial institutions (NBFIs), 645 foreign exchange bureaus, 16 savings and loan associations (SLAs) and one union of SLAs.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 34.9 21.2 43.9
Value Added (in % of GDP) 16.2 23.0 48.0
Value Added (Annual % Change) -1.8 3.1 8.3

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Albanian Lek (ALL) - Average Annual Exchange Rate For 1 USD 124.14119.10107.99109.90108.65

Source: World Bank - Latest available data.

 

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Foreign Trade

Albania’s foreign trade represents 82% of its GDP and is primarily conducted with Europe (World Bank, latest data available). According to data by INSTAT, in 2024, the country’s main exports were textile and footwear (28.7%), minerals, fuels, electricity (21.4%), construction materials and metals (18.9%), food, beverages, tobacco (12.6%), and machinery, equipment and spare parts (8.9%); whereas imports were led by machinery, equipment and spare parts (26.7%), food, beverages, tobacco (17.5%), construction materials and metals (13.4%), chemical and plastic products (13.0%), minerals, fuels, electricity (10.4%), and textile and footwear (9.7%).

In terms of countries, in 2024, the main export partners were Italy (43.7%), Kosovo (9.9%), Greece (6.3%), Spain (3.5%), and North Macedonia (3.2%), with imports coming chiefly from Italy (21.2%), followed by China (10.9%), Turkey (10.8%), Greece (7.6%), Germany (7.2%). In 2006, Albania signed the Stabilization and Association Agreement (SAA) with the EU, ratified in 2009, which liberalized trade by reducing duties and non-tariff restrictions on agricultural and industrial goods. The country is also a member of the multilateral Central European Free Trade Agreement (CEFTA) and has signed several free trade agreements.

Albania's trade balance is structurally in deficit, mainly because exports are neither sufficiently diversified nor competitive in terms of price, and because of the country’s narrow production base. In 2023, merchandise exports were stable y-o-y at USD 4.3 billion, while imports increased by 2.5%, reaching USD 8.6 billion. However, the country is a net exporter of commercial services, which amounted to USD 7.2 billion against USD 3.4 billion in imports (+43.3% and +38.3% y-o-y, respectively - data from WTO). According to the World Bank, the country’s trade deficit stood at 5.2% of its GDP, narrowing from 10.3% one year earlier. Data from the Institute of Statistics indicates that Albania's trade deficit for goods increased by 20.7% on the year to USD 5.5 billion in 2024, as imports grew 2.5% against a 15.3% decline in exports.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 5,8975,5707,7188,3998,613
Exports of Goods (million USD) 2,7162,5063,5594,3094,324
Imports of Services (million USD) 2,3941,3431,9962,5133,477
Exports of Services (million USD) 3,8082,5524,1175,0197,193

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 75.459.575.684.782.5
Trade Balance (million USD) -3,517-3,420-4,514-4,467-4,912
Trade Balance (Including Service) (million USD) -2,103-2,210-2,392-1,960-1,275
Imports of Goods and Services (Annual % Change) 2.5-19.832.511.50.2
Exports of Goods and Services (Annual % Change) 2.5-27.752.117.09.5
Imports of Goods and Services (in % of GDP) 44.437.044.547.543.8
Exports of Goods and Services (in % of GDP) 30.922.531.137.238.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 7.86.95.04.54.7
Volume of imports of goods and services (Annual % change) 11.67.54.83.14.4

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Member of the IMF, the World Bank and the Council of Europe.
 

Main Partner Countries

Main Customers
(% of Exports)		 2022
Italy 49.5%
Serbia 10.2%
Greece 6.8%
Spain 4.4%
Germany 2.6%
See More Countries 26.4%
Main Suppliers
(% of Imports)		 2022
Italy 23.4%
Türkiye 12.0%
Greece 10.1%
Serbia 6.3%
Germany 4.6%
See More Countries 43.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Bajram BEGAJ (since 24 July 2022)
Prime Minister: Edi RAMA (since 10 September 2013)
Next Election Dates
Presidential election: 2027
Legislative: April 2026
Main Political Parties
A number of political parties operate within the country:

- Socialist Party (PS): centre left, social democracy, pro-Europeanism
- Democratic Party (PD): centre-right, conservative, it is the main opposition party
- Right 1912 (Djathtas 1912): centre-right
- Euroatlantic Democrats (DEA): centre-right, liberal
- Republican Party (PR): right, conservative
- Freedom Party (PL): social democracy
- Social Democratic Party (PSD): centre left, supports the Socialist party government
- Party for Justice, Integration and Unity (PDIU): right-wing, nationalist
- Environmentalist Agrarian Party (PAA): environmental protection and agrarian issues
- Movement for National Development (LZHK): centre-right
- Unity for Human Rights Party (PBDNJ): represents the rights and interests of minorities and marginalized groups
- Legality Movement Party (PLL): right-wing, monarchist
- Hashtag Initiative (NTH): centrist, big tent
- Opportunity Party of Albania (PM): centre-right, por-European
Executive Power
The President is the head of state and is elected by a three-fifths majority vote of all Assembly members for a 5-year term (renewable once). Although the position is largely ceremonial, the Constitution does give the President authority to appoint and dismiss some civil servants in the executive and judicial branches. The Prime Minister is the head of the government and holds the executive powers. He is nominated by the President and approved by a simple majority of all members of the Assembly. The Prime Minister proposes the Council of Ministers, who are appointed by the President after being approved by the Assembly.
Legislative Power
The legislature in Albania is unicameral. The parliament, called the Assembly (Kuvendi), consists of 140 seats, with members elected directly in multi-seat constituencies by proportional representation vote. All members serve 4-year terms.
 

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