
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) | 22.82 | 26.13 | 27.99 | 29.92 | 31.85 |
GDP (Constant Prices, Annual % Change) | 3.5 | 3.3 | 3.4 | 3.5 | 3.5 |
GDP per Capita (USD) | 8,299 | 9,598 | 10,386 | 11,211 | 11,938 |
General Government Gross Debt (in % of GDP) | 59.8 | 58.3 | 57.0 | 56.2 | 55.5 |
Inflation Rate (%) | 4.8 | 2.2 | 2.4 | 2.6 | 3.0 |
Unemployment Rate (% of the Labour Force) | 10.7 | 10.7 | 10.7 | 10.7 | 10.7 |
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.
