EC DOCUMENT/REPORT: Albania's economy is expected to slow down in 2025-2026!

The European Commission has published its spring report, assessing the Albanian economy as slowing.

According to the report, Albania's economy will grow less than last year. 

The report notes that Albania's economic growth remained strong at 4% in 2024, driven by strong domestic demand, good tourism performance and stable construction activity.

Meanwhile, in 2025-2026 GDP growth is projected to moderate compared to previous years, but remain strong at 3.6% and 3.5% respectively.

The Commission bases the forecast on factors such as the slowing impact of wage increases in the public sector, slower growth in tourism, and the bottleneck caused in the labor market as a result of emigration, which is increasingly reducing the skilled labor force.

Excerpt from the EC Report:

After a strong growth momentum in previous years, Albania's economy is expected to grow by 3.6% in 2025 and 3.5% in 2026, supported by domestic demand.

Supported by tourism, services exports are expected to continue expanding, while goods exports are expected to recover somewhat after two years of significant contraction.

After a rapid decline in 2024, inflation is expected to gradually return to the 3% target next year.

The fiscal deficit is expected to widen before falling below 2% of GDP in 2026. The public debt-to-GDP ratio is projected to decline only gradually, driven by nominal GDP growth.

Albania's economic growth remained strong at 4% in 2024, driven by strong domestic demand, good tourism performance and stable construction activity.

Household and consumption growth was supported by real wage growth amid slowing inflation and accelerating credit growth. Public consumption growth was boosted on the back of the second phase of the public wage reform.

Job creation in the services sector supported employment growth.

Exports of services expanded, but exports of goods fell significantly. Similar to 2023, most economic sectors recorded positive output growth, but agriculture and industry contracted.

In 2025-2026, GDP growth is projected to moderate compared to previous years, but remain strong at 3.6% and 3.5% respectively.

Public consumption growth is projected to slow as the impact of the public wage reform wanes, while private consumption, supported by real wage growth and improvements in the labor market, is expected to remain strong over the forecast horizon. Investment and growth are supported by favorable financing conditions and reform implementation.

 On the external side, services exports are expected to continue to expand, but the growth in tourist arrivals is expected to be tempered by the double-digit growth rates observed in previous years.

After completion in 2024, merchandise exports are projected to recover somewhat as the goods sector undergoes structural changes and the effect of currency appreciation eases.

The current account deficit is expected to increase slightly from the historic low recorded in 2023, but remains well below its long-term average, pointing to structural improvements driven by the growth of tourism.

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