The World Bank in Albania

Country Context

Albania is implementing important structural reforms that will support equitable growth, raise productivity and competitiveness in the economy, create more jobs, and improve governance and public service delivery. Enhanced regional connectivity and access to regional and global markets, coupled with export and market diversification, can also help promote faster growth.

The government’s focus is now on sustainable growth with a special focus on tourism, agriculture, and digitization, as well as building resilience. Sustaining the pace of reforms is a priority. Albania opened accession talks with the European Union in mid-October 2024 and has since launched negotiations in three key clusters: Fundamentals, the Internal Market, and External Relations.

Albania’s economic growth in 2024 is estimated at 3.9% and in 2025 is expected to moderate to 3.2% and 3.1% in the medium-term. Poverty is expected to continue to decline as employment and wages rise. Heightened geopolitical tensions and uncertainty in trade policy pose risks to the medium-term outlook, as prospects hinge on external demand and continuity in structural reforms.

The World Bank and other partners are working together to support the government in overcoming these challenges and implementing the country’s longer-term vision.

Last Updated: May 06, 2025

Strategy

The World Bank Group program in Albania is guided by the Country Partnership Framework (CPF), which was approved on March 16, 2023. The CPF builds on a productive partnership with Albania and the findings of the World Bank Group’s analytical works and focuses on the priorities that are set out in the National Strategy for Development and European Integration. The priorities of the CPF are (1) creating more and better jobs, (2) strengthening human capital, and (3) enhancing Albania’s resilience to shocks. Initiatives to use digitization and improve inclusivity will support efforts across these three priorities, retaining accession to the European Union (EU) as a long-term goal.  

Considering the substantial progress made in the Program for Results (PforR) Improving Equitable Access to High Standard Public Services Through GovTech,, an additional financing of $80 million was signed in April 2025. The focus of this financing will be on public procurement and public financial management through e-procurement and the Financial Management Information System both at central and local levels. The Second Development Policy Loan (DPL2), (part of the programmatic series) was signed in April 2025. This was a result of the government completing critical legislation related to strengthening revenue mobilization, advancing renewable energy, improving public sector efficiency, and reducing environmental degradation and emissions. 

Last Updated: May 06, 2025

RECENT ECONOMIC DEVELOPMENTS

Growth held steady at 4% in 2024, mirroring the 2023 performance. Services and construction led the expansion, while industry and agriculture slowed. On the demand side, private consumption and investment drove growth, while net exports weighed negatively. The employment rate averaged 68.6% in 2024, and poverty declined by 1.7 percentage points. Unemployment dropped to 9.4%. Average wages rose by 9.8% in 2024, with gains across all sectors. Credit grew by 12% year-on-year, with strong increases for both businesses and households.

During Q1–Q3 2024, the current account deficit widened to an estimated 1.5% of GDP, driven by a rising trade deficit due to falling goods exports and increasing imports, but it remained below the five-year average. Net Foreign Direct Investment (FDI) continued to perform strongly, increasing by 6.1%, and foreign currency reserves reached $6.6 billion as of December 2024.  

In 2024, inflation more than halved relative to 2023, averaging 2.2%, mainly due to lower import-driven pressures. Domestic inflationary pressures are now the main driver of rising consumer prices.

As of December 2024, fiscal performance remained strong, supported by solid revenue collection and sluggish capital spending. The primary surplus met fiscal rules, and the overall deficit stayed low at 0.8% of GDP.  

ECONOMIC OUTLOOK

Economic growth is expected to moderate to 3.2% in 2025 and 3.1% in the medium-term, amidst global trade policy uncertainty and the evolving global outlook. Inflation is expected to rise to the 3% target and fluctuate around it, driven by domestic pressures like wage growth and supply chain disruptions linked to trade shifts.

The current account deficit is expected to hover around 3.7% of GDP from 2025, gradually rising to 4.1% by 2027, yet remaining below the historical average. Higher imports linked to large public investments will widen the deficit, though improved service exports will help contain it. Poverty is expected to decline to 16%.

Albania’s primary fiscal balance is expected to remain positive from 2025, averaging 0.4% of GDP. This assumes partial execution of capital expenditures and does not fully reflect the Medium-Term Revenue Strategy 2025- 2027. Public debt is projected to decline to an average of 52.8% of GDP over the period.

Risks to the outlook include heightened geopolitical tensions and uncertainty in global trade and economic policy, which could dampen EU growth—Albania’s main trading partner. Domestic fiscal risks from public-private partnerships and state-owned enterprises add to vulnerabilities. However, effective EU Growth Agenda implementation and strong tourism receipts represent upsides to the uncertainty. 

Last Updated: May 06, 2025