Economy Overview
Albania, a formerly closed, centrally planned state, is a developing country with a modern open-market economy. Albania managed to weather the first waves of the global financial crisis but, the negative effects of the crisis caused a significant economic slowdown. Since 2014, Albania’s economy has steadily improved and economic growth reached 3.8% in 2017. However, close trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of possible debt crises and weak growth in the euro zone.
Remittances, a significant catalyst for economic growth, declined from 12-15% of GDP before the 2008 financial crisis to 5.8% of GDP in 2015, mostly from Albanians residing in Greece and Italy. The agricultural sector, which accounts for more than 40% of employment but less than one quarter of GDP, is limited primarily to small family operations and subsistence farming, because of a lack of modern equipment, unclear property rights, and the prevalence of small, inefficient plots of land. Complex tax codes and licensing requirements, a weak judicial system, endemic corruption, poor enforcement of contracts and property issues, and antiquated infrastructure contribute to Albania's poor business environment making attracting foreign investment difficult. Since 2015, Albania has launched an ambitious program to increase tax compliance and bring more businesses into the formal economy. In July 2016, Albania passed constitutional amendments reforming the judicial system in order to strengthen the rule of law and to reduce deeply entrenched corruption.
Albania’s electricity supply is uneven despite upgraded transmission capacities with neighboring countries. However, the government has recently taken steps to stem non-technical losses and has begun to upgrade the distribution grid. Better enforcement of electricity contracts has improved the financial viability of the sector, decreasing its reliance on budget support. Also, with help from international donors, the government is taking steps to improve the poor road and rail networks, a long standing barrier to sustained economic growth.
Inward foreign direct investment has increased significantly in recent years as the government has embarked on an ambitious program to improve the business climate through fiscal and legislative reforms. The government is focused on the simplification of licensing requirements and tax codes, and it entered into a new arrangement with the IMF for additional financial and technical support. Albania’s three-year IMF program, an extended fund facility arrangement, was successfully concluded in February 2017. The Albanian Government has strengthened tax collection amid moderate public wage and pension increases in an effort to reduce its budget deficit. The country continues to face high public debt, exceeding its former statutory limit of 60% of GDP in 2013 and reaching 72% in 2016.
Agriculture Products
wheat, corn, potatoes, vegetables, fruits, olives and olive oil, grapes; meat, dairy products; sheep and goats
Industries
food; footwear, apparel and clothing; lumber, oil, cement, chemicals, mining, basic metals, hydropower
Industrial Production Growth Rate
6.8%
(2017 est.)
Labor Force
1.104 million
(2020 est.)
Labor Force by Occupation
Agriculture: 41.4%
Industry: 18.3%
Services: 40.3%
(2017 est.)
Unemployment Rate
6.32%
(2018 est.)
Population Below Poverty Line
14.3%
(2012 est.)
Household Income or Consumption by Percentage Share
Lowest 10%: 4.1%
Highest 10%: 19.6%
(2015 est.)
Budget
Revenues: 3.614 billion
(2017 est.)
Expenditures: 3.874 billion
(2017 est.)
Public Debt
73.2% of GDP
(2016 est.)
Commercial Bank Prime Lending Rate
Market Value of Publicly Traded Shares
Reserves of Foreign Exchange and Gold
$3.109 billion
(31 December 2016 est.)
Debt External
$8.421 billion
(31 December 2016 est.)
Stock of Direct Foreign Investment at Home
Stock of Direct Foreign Investment Abroad
Exchange Rates
105.48
(2013 est.)
