International
support

In more than 90 countries

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Albania is a transition economy, not highly integrated into global capital flows but showing strong economical performances. The country has been impacted by the difficulties of the Eurozone, which is the destination of almost 80% of its exports and the largest investor in the country. The Albanian economy has maintained positive momentum despite the repercussions of Russia’s invasion of Ukraine and grew an estimated 4% in 2022 (IMF) fuelled by robust activity in the tourism, real estate, and services sectors. Considering the difficult situation of partner economies and reflecting tighter financial conditions, the IMF projects growth at 2.5% this year and 3.2% in 2024, although uncertainty remains high at the global level.

The impact of the COVID-19 pandemic on the economy, the budget deficit and the public debt ratio were lower than expected, but fiscal space remains limited. According to IMF data, public debt represented 70.3% of GDP in 2022 and is expected to narrow to 68.5% by 2024 helped by continued economic growth. The budget deficit was estimated at 3.3% of GDP in 2022, with the 2023 fiscal budget projecting a deficit of 2.6% in GDP (when the primary balance should return positive, at 0.2% of GDP). Revenue-related reforms progressed, but investment expenditure remains weak. Inflation jumped to 6.2% in 2022 and is expected to decelerate in 2023 (4.3%) before returning to the central bank’s target of 3% by mid-2024 (IMF), as international commodity prices stabilize, fiscal and monetary policies tighten, and growth slows.

After the peaks reached during the COVID-19 pandemic, the unemployment rate resumed its downward path and was estimated at 10.3% in 2022 by the IMF. Over the forecast horizon, it is projected to hover around 10%. Albania remains one of the poorest countries in Europe (with a GDP per capita PPP of USD 17,858 in 2022 - IMF). Although the situation improved in the two last decades, Albania still has the largest poverty headcount in the Western Balkans (around 37% of the population as per the World Bank's latest figures). Increased public service digitalisation, financial inclusion, and labour inspections benefitted the business environment and the formalisation of the economy, but a large share of GDP (estimated at around 50%) is still accounted for by the informal economy, which hinders the economic reform agenda. After several years of procrastination, Albania finally began official accession talks with the European Union in July 2022.

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 15.1618.3118.5120.1820.85
GDP (Constant Prices, Annual % Change) -3.58.53.72.33.3
GDP per Capita (USD) 5,2686,3736,4577,0597,316
General Government Gross Debt (in % of GDP) 75.973.967.668.666.7
Inflation Rate (%) 1.62.06.75.03.4
Unemployment Rate (% of the Labour Force) 11.711.411.111.011.0
Current Account (billions USD) -1.32-1.40-1.44-1.56-1.59
Current Account (in % of GDP) -8.7-7.7-7.8-7.7-7.6

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

+

Main Sectors of Industry

Agriculture is an important sector for the Albanian economy. It contributes 17.7% of the GDP and employs 36% 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 Albania’s agriculture sector meets only one-third of the domestic demand for food and feed (World Bank, 2022); 42.8% of its territory is classified as agricultural land (1,17 million ha) and 28.7% are forests; source: FAO). Finally, 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 INSTAT shows that in the first three quarters of 2022, the country’s agricultural production decreased by 0.02%.

The industrial sector accounts for 21.8% of the country's GDP and employs 20% of the active population. The sector is concentrated on food processing, textiles and clothing, timber work (construction), oil, cement, chemical products, mining, transport and hydraulic energy. The manufacturing sector’s value-added is estimated to contribute to nearly 6% of the country’s GDP (World Bank).

The services sector represents 47.7% of the GDP, employing around 43% of the workforce. Tourism is an important sector of the economy: after being severely affected by the COVID-19 pandemic, in the first eleven months of 2022 Albania welcomed over 12 million tourists, marking an 8% increase compared to the pre-pandemic level recorded in 2019 (INSTAT). According to the latest figures by the European Banking Federation, the structure of the banking and financial system consists of 12 banks (four of which with Albanian capital and eight with foreign capital), 30 non-bank financial institutions (NBFIs), 538 foreign exchange bureaus, 14 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) 36.4 20.1 43.4
Value Added (in % of GDP) 17.7 21.8 47.7
Value Added (Annual % Change) 0.3 16.0 9.1

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.

 

+

Foreign Trade

Albania’s foreign trade represents 75% of its GDP and is mostly made with Europe (World Bank, latest data available). The country mainly imports machinery, equipment and spare parts (19.7%); minerals, fuels, electricity (18.1%); food, beverages, tobacco (15.7%); construction materials and metals (14.4%); and chemical and plastic products (12.3%). Exports are led by textile and footwear (27.8%); minerals, fuels, and electricity (22.1%); construction materials and metals (21.6%); and food, beverages, and tobacco (10.6% - data Instat 2022).

Trade with EU countries represented 59% of total trade in 2022: in this period, the share of EU countries was 73.4% of total export and 51.6% of total imports. The main trade export destinations were Italy (43.2 %), Kosovo (7.8%), Germany (6.6%), Greece (5.2%) and Spain (4.8%); whereas imports came chiefly from Italy (21.7%), Turkey(12.1%), China (8.2%), Greece (7.8%), and Germany (6.2% - data Instat).

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 2021, merchandise exports reached USD 3.5 billion (+42% y-o-y), while imports increased at a slower pace (38.5%), to reach USD 7.7 billion. However, the country is a net exporter of commercial services, which stood at USD 4 billion against USD 2 billion in imports (+65.4% and +59.1% y-o-y, respectively - data by WTO). According to data from the Institute of Statistics, Albania’s exports surged by by 32% in 2022, to ALL 486.7 billion against ALL 950.3 billion in imports (+18.7%).

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 5,2715,9255,8975,5707,718
Exports of Goods (million USD) 2,2922,8702,7162,5063,559
Imports of Services (million USD) 1,8982,1932,3011,2541,996
Exports of Services (million USD) 3,1933,5743,7432,4744,094

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

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 78.276.876.360.074.5
Trade Balance (million USD) -3,205-3,381-3,517-3,420-4,514
Trade Balance (Including Service) (million USD) -1,979-2,070-2,103-2,210-2,392
Imports of Goods and Services (Annual % Change) 8.42.42.3-19.831.7
Exports of Goods and Services (Annual % Change) 13.24.02.6-27.946.5
Imports of Goods and Services (in % of GDP) 46.645.245.037.243.9
Exports of Goods and Services (in % of GDP) 31.631.631.322.730.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) 13.7-0.40.22.53.7
Volume of imports of goods and services (Annual % change) 7.2-0.40.32.73.9

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

 

+

Political Outline

Current Political Leaders
President: Bajram BEGAJ (since 24 July 2022) - independent
Prime Minister: Edi Rama (since September 2013) - Socialist Party
Next Election Dates
Presidential election: 2027
Legislative: 2025
Main Political Parties
A number of political parties operate within the country:

- Socialist Party: centre left, social democracy, pro-Europeanism
- Democratic Party: centre right, conservative, it is the main opposition party
- Socialist Movement for Integration: centre left
- Party for Justice, Integration and Unity: right-wing, nationalist
- Demochristian Party: centre right
- Republican Party: right, conservative
- Social Democratic Party: centre left, supports the Socialist party government
- Liberal Democratic Union: centre, liberal
- Democratic Alliance Party: centre, liberal

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 appointed by the President and approved by a simple majority of all members of the Assembly. The Prime Minister proposes the Council of Ministers which must be nominated by the President and approved by the Assembly.
Legislative Power
The legislature in Albania is unicameral. The parliament, called People's Assembly, consists of 140 seats, with members elected directly in multi-seat constituencies by proportional representation vote. All members serve 4-year terms.
 

+

COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For a summary in English of the specific economic and fiscal measures adopted by the government, refer to the website of KPMG and to the Deloitte guide.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) undertaken by the Albanian government, please consult the section dedicated to Albania in the IMF’s Policy Tracker platform.

Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

+