Albania Economic Outlook
A growing but underdeveloped economy:
Albania has experienced steady economic growth over the past two decades, transitioning from a closed communist system to a market-based economy. Growth has been driven by construction, tourism, and remittances from Albanians working abroad. However, the economy remains underdeveloped, with high levels of informality and limited industrial capacity.
Tourism as a key driver:The tourism sector has become a major contributor to Albania’s economy, attracting visitors with its pristine coastline, historical sites, and relatively low prices compared to other Mediterranean destinations. The sector was hit hard by the COVID-19 pandemic but has rebounded strongly. However, further investment in infrastructure and regulatory improvements are needed to maintain sustainable growth.
Challenges in governance and investment climate:Albania faces significant challenges in reducing corruption, improving governance, and creating a more business-friendly environment. The country has struggled to attract large-scale foreign investment due to legal uncertainties and bureaucratic inefficiencies. Strengthening the rule of law and improving access to finance will be key to boosting private sector development.
Albania’s economic prospects:While Albania is expected to maintain steady growth, progress toward EU accession remains a major factor in its long-term economic prospects. Structural reforms, particularly in governance, education, and energy, will be crucial to unlocking sustained growth and reducing reliance on remittances and tourism.
Albania's Macroeconomic Analysis:
Nominal GDP of USD 27.2 billion in 2024.
Nominal GDP of USD 27.2 billion in 2024.
Nominal GDP of USD 23.5 billion in 2023.
GDP per capita of USD 8,562 compared to the global average of USD 10,589.
GDP per capita of USD 9,985 compared to the global average of USD 10,589.
GDP per capita of USD 9,985 compared to the global average of USD 10,589.
Average real GDP growth of 3.3% over the last decade.
Average real GDP growth of 3.3% over the last decade.
Average real GDP growth of 3% over the last decade.
Sector Analysis
In 2022, services accounted for 48.0% of overall GDP, manufacturing 5.9%, other industrial activity 27.8%, and agriculture 18.3%. Looking at GDP by expenditure, private consumption accounted for 75.5% of GDP in 2021, government consumption 11.1%, fixed investment 24.8%, and net exports -11.4%.International trade
In 2022, manufactured products made up 34.5% of total merchandise exports, mineral fuels 0.4%, food 8.8%, ores and metals 0.1% and agricultural raw materials 0.2%, with other categories accounting for 56.0% of the total. In the same period, manufactured products made up 19.8% of total merchandise imports, mineral fuels 0.3%, food 11.7%, ores and metals 0.3% and agricultural raw materials 0.3%, with other goods accounting for 67.6% of the total. Total exports were worth USD 1.80 billion in 2024, while total imports were USD 7.90 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 3.0% in the decade to 2023. To read more about GDP growth in Albania, go to our dedicated page.
Fiscal policy
Albania's fiscal deficit averaged 3.4% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 13.5% in the decade to 2023. For more information on Albania's unemployment click here.
Inflation
Inflation averaged 2.5% in the decade to 2024. Go to our Albania inflation page for extra insight.
Monetary Policy
Albania's monetary policy rate ended 2024 at 2.75%, up from 2.25% a decade earlier. See our Albania monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the lek strengthened by 23% vs the U.S. dollar. For more info on the lek, click here.
Economic situation in Albania
The economy ended 2024 on a milder note; annual GDP growth fell to its lowest level in almost two years in Q4 on weaker expansions in government spending and fixed investment plus a decline in exports. Meanwhile, private spending growth accelerated, spurred on by rising real wages. In 2024 as a whole, GDP growth inched up from 2023 and outperformed the past-decade average. Shifting to Q1, available data suggests slower growth in the domestic sector; private consumption may have lost steam from Q4 amid deteriorating consumer sentiment and higher inflation. Moreover, growth in tourist arrivals in Q1 fell below Q4’s level as the post-pandemic recovery faded. Still, goods exports rebounded, providing a lifeline, rising a sharp 6.4% in Q1 (Q4: -14.8% yoy). In politics, Prime Minister Edi Rama’s reelection on 11 May bodes well for policy continuity and the country’s EU accession bid.Albania Economic Forecasts
Projections out to 2034.49 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 12 expert analysts.
Want to get insight on the economic outlook for Albania in the coming years? FocusEconomics collects projections out to 2034 on 49 economic indicators for Albania from a panel of 12 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Albania economy. To download a sample report on the Albania's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.