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.

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%).

COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Albania, please visit official portal Coronavirus.al (in Albanian), which also provides information about the geographical distribution of the epidemic in the country. Daily reports on the situation can be found on the website of the Prime Minister of Albania.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Albania and the current sanitary measures in vigour, please consult the official portal Coronavirus.al (in Albanian) including the up-to-date information on the containment measures put in place and public health recommendations for citizens, businesses, public administration employees and private sector employees. The list of the legislative acts adopted to introduce the sanitary measures are available here. An overview can be found on the Deloitte website.
The state of natural catastrophe has been extended until June 23^rd.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

The export of medicines and medical devices will be allowed only upon the authorization of the Minister of Health (subject to a penalty of ALL 5 million, accompanied with the suspension of the activity for 6 months in case of reiteration).
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Albania on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

To know about the economic measures taken by the Albanian government to address the impact of the COVID-19 pandemic on the national economy, please visit the dedicated page on the official governmental portal Coronavirus.al (in Albanian). A second economic support package has also been announced. For an English overview of such measures, 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) taken by the Albanian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Albania in the IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme and taxation measures established by the Albanian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the dedicated pages on the governmental portal Coronavirus.al (in Albanian). Further information can be sourced on the Deloitte guide.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

The second set of measures taken by the Albanian government includes a sovereign guarantee of ALL 15 billion (0.9% of GDP) to provide loans for working capital for active processing exporting companies (and for the tourism sector), with the government taking charge of the interest costs.