Albania: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
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 , Latest available data
Note: (e) Estimated Data
Agriculture is a pivotal sector for the Albanian economy. It contributes 16.2% of the GDP and employs 34.9% 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 the national 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). However, 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 the Minister of Agriculture and Rural Development show that the country’s agricultural exports increased 21% y-o-y in 2024. The government's objective is to reach USD 1 billion in exports by 2030.
The industrial sector accounts for 23% of the country's GDP and employs 21.2% 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 has historically been significant contributors to the economy, leveraging the country's skilled workforce and competitive labour 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 48% of the GDP, employing around 43.9% 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 11.7 million in 2024 (+15.2% 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 11 banks (five of which have Albanian capital and six with foreign capital), 40 non-bank financial institutions (NBFIs), 645 foreign exchange bureaus, 16 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) | 34.9 | 21.2 | 43.9 |
| Value Added (in % of GDP) | 16.2 | 23.0 | 48.0 |
| Value Added (Annual % Change) | -1.8 | 3.1 | 8.3 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Albanian Lek (ALL) - Average Annual Exchange Rate For 1 MUR | 3.49 | 3.45 | 3.18 | 3.10 | 2.76 |
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Albania’s foreign trade represents 82% of its GDP and is primarily conducted with Europe (World Bank, latest data available). According to data by INSTAT, in 2024, the country’s main exports were textile and footwear (28.7%), minerals, fuels, electricity (21.4%), construction materials and metals (18.9%), food, beverages, tobacco (12.6%), and machinery, equipment and spare parts (8.9%); whereas imports were led by machinery, equipment and spare parts (26.7%), food, beverages, tobacco (17.5%), construction materials and metals (13.4%), chemical and plastic products (13.0%), minerals, fuels, electricity (10.4%), and textile and footwear (9.7%).
In terms of countries, in 2024, the main export partners were Italy (43.7%), Kosovo (9.9%), Greece (6.3%), Spain (3.5%), and North Macedonia (3.2%), with imports coming chiefly from Italy (21.2%), followed by China (10.9%), Turkey (10.8%), Greece (7.6%), Germany (7.2%). In 2006, Albania signed the Stabilization and Association Agreement (SAA) with the EU, ratified in 2009, which liberalized trade by reducing duties and non-tariff restrictions on agricultural and industrial goods. The country is also a member of the multilateral Central European Free Trade Agreement (CEFTA) and has signed several free trade agreements.
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 2023, merchandise exports were stable y-o-y at USD 4.3 billion, while imports increased by 2.5%, reaching USD 8.6 billion. However, the country is a net exporter of commercial services, which amounted to USD 7.2 billion against USD 3.4 billion in imports (+43.3% and +38.3% y-o-y, respectively - data from WTO). According to the World Bank, the country’s trade deficit stood at 5.2% of its GDP, narrowing from 10.3% one year earlier. Data from the Institute of Statistics indicates that Albania's trade deficit for goods increased by 20.7% on the year to USD 5.5 billion in 2024, as imports grew 2.5% against a 15.3% decline in exports.
| Foreign Trade Indicators | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 5,897 | 5,570 | 7,718 | 8,399 | 8,613 |
| Exports of Goods (million USD) | 2,716 | 2,506 | 3,559 | 4,309 | 4,324 |
| Imports of Services (million USD) | 2,394 | 1,343 | 1,996 | 2,513 | 3,477 |
| Exports of Services (million USD) | 3,808 | 2,552 | 4,117 | 5,019 | 7,193 |
| Imports of Goods and Services (Annual % Change) | 2.5 | -19.8 | 32.5 | 11.5 | 0.2 |
| Exports of Goods and Services (Annual % Change) | 2.5 | -27.7 | 52.1 | 17.0 | 9.5 |
| Imports of Goods and Services (in % of GDP) | 44.4 | 37.0 | 44.5 | 47.5 | 43.8 |
| Exports of Goods and Services (in % of GDP) | 30.9 | 22.5 | 31.1 | 37.2 | 38.7 |
| Trade Balance (million USD) | -3,517 | -3,420 | -4,514 | -4,467 | -4,912 |
| Trade Balance (Including Service) (million USD) | -2,103 | -2,210 | -2,392 | -1,960 | -1,275 |
| Foreign Trade (in % of GDP) | 75.4 | 59.5 | 75.6 | 84.7 | 82.5 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2022 |
|---|---|
| Italy | 49.5% |
| Serbia | 10.2% |
| Montenegro | 7.9% |
| Greece | 6.8% |
| North Macedonia | 5.5% |
| See More Countries | 20.1% |
| 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
Source: Comtrade, Latest Available Data
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| 6.3 bn USD of services exported in 2023 | |
|---|---|
| 71.23% | |
| 12.19% | |
| 9.16% | |
| Miscellaneous business,...Miscellaneous business, professional, and technical services | 9.12% |
| Research and developmentResearch and development | 0.04% |
| 3.39% | |
| 1.69% | |
| 0.94% | |
| 0.82% | |
| 0.30% | |
| 0.24% | |
| 0.05% | |
| 3.5 bn USD of services imported in 2023 | |
|---|---|
| 72.71% | |
| 12.27% | |
| 4.54% | |
| Miscellaneous business,...Miscellaneous business, professional, and technical services | 3.93% |
| Research and developmentResearch and development | 0.61% |
| 3.54% | |
| 3.48% | |
| 1.15% | |
| 0.97% | |
| 0.76% | |
| 0.44% | |
| 0.15% | |
Source: United Nations Statistics Division, Latest Available Data
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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