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Economic Overview

Albania is considered a transition economy, not highly integrated into global capital flows but demonstrating strong economic performance. The country has been affected by the challenges within the Eurozone, which receives nearly 80% of its exports and serves as the largest investor in the nation. Despite maintaining positive momentum in the face of repercussions from Russia’s invasion of Ukraine, the Albanian economy showed signs of moderation in 2023, according to the International Monetary Fund (IMF), experiencing an estimated growth of 3.6% compared to the 4.8% increase recorded in 2022. Despite this slowdown, the IMF highlighted the country's economic resilience, driven by strong private consumption, a robust services sector, active construction, increased electricity production, and a surge in tourism. Looking ahead to 2024, the IMF projects a further slowdown in growth to 3.3%, still driven by robust private consumption and further boosts from tourism and construction.

Albania's government has undertaken significant fiscal consolidation efforts in the aftermath of the pandemic. This includes notable improvements in collecting value-added tax. Consequently, the country achieved a zero primary balance-to-GDP ratio in 2023, exceeding the government's fiscal rule of a non-negative primary balance one year earlier than planned. The IMF anticipates limited additional fiscal consolidation in the medium term. The 2024 budget aims for a small primary surplus, indicating continued responsible fiscal management. Despite the slowdown in economic growth, public debt remained around 62.9% at the end of 2023 and is projected to be sustainable in the medium to long term (estimated at 59.7% by 2025). Inflation, which hovered around 4.8% in 2023 due to tight labor markets, is expected to gradually decrease, reaching the central bank's target of 3% by early 2025 (IMF). The central bank itself remains more optimistic, anticipating a return to the 3% target by mid-2024.

The unemployment rate was estimated at around 11% in 2023 by the IMF and is expected to remain relatively stable over the forecast horizon. The National Employment and Skills Strategy implemented by the government aims to strengthen vocational training, upskilling, and inclusion. Increased public service digitalization, financial inclusion, and labor inspections have benefited the business environment and the formalization of the economy. However, 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 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 19.0822.7425.4326.9128.69
GDP (Constant Prices, Annual % Change) 4.83.33.13.43.5
GDP per Capita (USD) 6,6587,9578,9249,47410,135
General Government Gross Debt (in % of GDP) 65.560.058.057.056.5
Inflation Rate (%) 6.74.83.53.03.0
Unemployment Rate (% of the Labour Force) 11.111.011.011.011.0
Current Account (billions USD) -1.14-0.84-0.96-1.11-1.12
Current Account (in % of GDP) -6.0-3.7-3.8-4.1-3.9

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 an important sector for the Albanian economy. It contributes 18.6% of the GDP and employs 35% 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); 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 agricultural growth is projected to average approximately 2.4% annually in real terms between 2025 and 2027, making an average annual contribution to economic expansion of roughly 0.4 percentage points.

The industrial sector accounts for 21.4% of the country's GDP and employs 21% 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 have historically been significant contributors to the economy, leveraging the country's skilled workforce and competitive labor 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 47.4% of the GDP, employing around 44% 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 10.1 million in 2023 (+35% 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 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) 34.6 21.6 43.8
Value Added (in % of GDP) 18.6 21.4 47.3
Value Added (Annual % Change) 0.1 7.7 6.2

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 85% of its GDP and is primarily conducted with Europe (World Bank, latest data available). The country mainly imports machinery and equipment, minerals and metals, textiles and clothing, petroleum products, foodstuffs, and chemicals. In 2022, Albania's exports primarily consisted of minerals, textiles and footwear, agricultural products, metals, and energy products. Minerals, especially chromium ore, represent a significant portion of Albania's exports, leveraging its rich natural resources.

In terms of country, in 2022, the main export partners were Italy (49.5%), Serbia (10.2%), Montenegro (7.9%), Greece (6.8%), North Macedonia (5.5%), and Spain (4.4%); whereas imports came chiefly from Italy (23.4%), Turkey (12.0%), Greece (10.1%), Serbia (6.3%), and Germany (4.6% - data from Comtrade). Albania sourced 51.6% of its imports from the EU in 2022, while 76% of its exports were destined for EU countries.

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 2022, merchandise exports reached USD 4.3 billion (+21% y-o-y), while imports increased at a slower pace (8.8%), reaching USD 8.4 billion. However, the country is a net exporter of commercial services, which amounted to USD 5 billion against USD 2.5 billion in imports (+21.9% and +25.9% y-o-y, respectively - data from WTO). According to the World Bank, the country’s trade deficit stood at 10.4% of its GDP. Data from the Institute of Statistics indicates that Albania’s exports fell by 9.5% to ALL 440.3 billion, while imports declined by 8.2% to ALL 872.6 billion.

 
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 20182019202020212022
Foreign Trade (in % of GDP) 76.876.359.876.085.3
Trade Balance (million USD) -3,381-3,517-3,420-4,514-4,467
Trade Balance (Including Service) (million USD) -2,070-2,103-2,210-2,392-1,960
Imports of Goods and Services (Annual % Change) 2.42.3-19.831.513.1
Exports of Goods and Services (Annual % Change) 4.02.6-27.952.07.5
Imports of Goods and Services (in % of GDP) 45.245.037.244.747.8
Exports of Goods and Services (in % of GDP) 31.631.322.731.337.5

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) 7.69.35.35.45.3
Volume of imports of goods and services (Annual % change) 6.78.95.25.15.1

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
Serbia 10.2%
Greece 6.8%
Spain 4.4%
Germany 2.6%
Türkiye 1.7%
See More Countries 74.2%
Main Suppliers
(% of Imports)
2022
Türkiye 12.0%
Greece 10.1%
Serbia 6.3%
Germany 4.6%
China 4.2%
See More Countries 62.8%

Source: Comtrade, Latest Available Data

 

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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 (PS): centre left, social democracy, pro-Europeanism
- Democratic Party (PD): centre right, conservative, it is the main opposition party
- Republican Party: right, conservative
- Party for Justice, Integration and Unity: right-wing, nationalist
- Social Democratic Party (PSD): centre left, supports the Socialist party government
- Legality Movement Party (PLL): focuses on legal reform and democratic principles
- 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

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 or 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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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.

 

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