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flag Albania Albania: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Albania was the last central and eastern European country to adopt free-market reforms. Even though the country's economy has improved during the last few years, Albania still remains one of the poorest countries in Europe. In 2014, one in seven inhabitant still lives below the poverty threshold and nearly 50% of the GDP is made up by the informal economy, a fact which has hindered the current economic reform program.

However, with its solvent and well-capitalized banking, in 2009 and 2010 Albania resisted the global crisis better than its Balkan neighbours, due to its still limited international openness and the development of global prices of raw materials. The country has escaped the recession during the years of crisis, although the fall in activity in the EU and the neighbouring countries of Southeastern Europe weighed heavily on the economy. Greece is a major trading partner and investor, as well as a provider of remittances from the diaspora and its economic difficulties since 2011 have been felt strongly in Albania.

The current government is pursuing a program focused on the fight against corruption, organized crime and trafficking, and the implementing of liberal reforms designed to prepare Albania for future EU membership and able to attract foreign investors.

To the extent that Albania is a country only moderately integrated into global capital flows, the impact of the international situation has been less dramatic than in other countries of Eastern Europe. The country grew only by 1.7% in 2013 (after only 0.5% in 2012). The economy is burdened by a debt of more than 60% of GDP in 2013, exports at half mast and a significant drop in remittances from Albanian migrants living abroad. Albania's economic results are linked to the recession in the eurozone, an area receiving over 80% of its export.

The development of the country in the coming years could also be helped by the expectations of an official application for accession to the European Union.

In 2014, the Albanian economy remains fragile and dependent on outside institutional assistance.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 12.6812.1712.7213.59e14.52
GDP (Constant Prices, Annual % Change) 2.31.1e0.42.13.3
GDP per Capita (USD) 4,460e4,321e44,900e5,261
General Government Gross Debt (in % of GDP) 60.462.970.572.171.6
Inflation Rate (%) 3.42.01.9e1.8e2.7
Unemployment Rate (% of the Labor Force) 14.013.415.614.013.5
Current Account (billions USD) -1.69-1.22e-1.32e-1.50e-1.85
Current Account (in % of GDP) -13.3-10.0e-10.4-11.0e-12.7

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The share of agriculture in the GDP is 17.5%. The sector employs 42.9% of the active population. Agricultural production is concentrated on wheat, corn, oats, sorghum, cotton, potatoes, vegetables, the olive, tobacco, fruits, beet sugar, vines, livestock farming and dairy products. Agriculture suffers from the lack of modern equipment, ownership and land parceling problems, all of which lead to a relatively low productivity. It has to be noted that agricultural production is higher than its share in the GDP. As a matter of fact, a large part of the produce is consumed by the farmers themselves and, therefore, it is not sold.

In 2013, the industrial sector accounted for 15.3% of the country's GDP and employed 23.9% of the active population. The sector is concentrated on food processing, textiles and clothing, timber work (construction), oil, cement, chemical products, mining, transport and hydraulic energy.

The services sector represented 67.2% of the GDP in 2013, employing a third of the active population (33.2% in 2012). Tourism, telephony, the banking and insurance sectors are in full expansion.

During the last past years, the share of income from the agricultural and industrial sectors has been falling progressively. In parallel, the part of the services sector is increasing each year and the sector has been a key driver of the Albanian economy.

The sectors of telecommunications, energy, minerals and medical equipment are expected to develop in the following years and they offer good opportunities.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 41.5 20.8 37.7
Value Added (in % of GDP) 22.2 15.3 62.5
Value Added (Annual % Change) 0.7 8.8 -2.2

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Albanian Lek (ALL) - Average Annual Exchange Rate For 1 USD 94.98103.94100.89108.18105.67

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Albania on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

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, labor 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.

Score:
66.9/100
Position:
Moderately Free
World Rank:
54/178
Regional Rank:
25/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Albania is focused on imports. In these recent years, imports have registered a growth of more than 25%. The main import goods are high value-added products such as machinery and equipment, metals, vehicles and means of transport. Albania's main suppliers are Italy (over 28% of total imports in 2013), Greece and China (over 10%%) and then Turkey (5%). The country mainly exports mineral ores (over 15% of the total exports), as well as textile products and shoes, metal, crude oil, vegetables, fruits and tobacco. 

Albania's main customers are Italy (over 50% of export), Turkey, Kosovo and Greece. In 2013, the European Union remained Albania's main trading partner, representing more than 65% of Albanian imports and 70% of Albanian exports. The country has a structural trade deficit. The increase in imports is due to the rise of international prices in certain goods and electricity. Additionally, exports are neither sufficiently diversified nor competitive in terms of prices. Furthermore, the economic crisis has had an impact on exports, which experienced a sharp drop after 2008 since Albania's commercial partners, also affected by the crisis, have reduced their demand for Albanian products.

The worsening position of Albania's key trading partners (Italy and Greece in particular) should continue to have a negative impact on the country's trade balance in 2014.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 4,5504,4065,3964,8824,855
Exports of Goods (million USD) 1,0911,5451,9511,9682,331
Imports of Services (million USD) 2,2151,9902,2351,8612,085
Exports of Services (million USD) 2,3482,2562,3982,0691,998
Imports of Goods and Services (Annual % Change) -5.46.1-6.62.7
Exports of Goods and Services (Annual % Change) -0.67.4-0.66.1
Imports of Goods and Services (in % of GDP) 53.853.056.751.952.9
Exports of Goods and Services (in % of GDP) 29.632.434.033.335.1
Trade Balance (million USD) -3,392-3,038-3,499-2,859-2,518
Trade Balance (Including Service) (million USD) -2,967-2,458-2,933-2,297-2,310
Foreign Trade (in % of GDP) 83.485.590.885.287.9

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Italy 46.3%
Spain 9.8%
Serbia 7.5%
Malta 6.7%
China 4.6%
See More Countries 25.0%
Main Suppliers
(% of Imports)
2013
Italy 33.1%
Greece 8.9%
China 6.8%
Turkey 6.4%
Germany 5.8%
See More Countries 39.1%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 28.2%
Footwear with outer soles of rubber, plastics,...Footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather (excl. orthopaedic footwear, skating boots with ice or roller skates attached, and toy footwear) 6.7%
Parts of footwear, incl. uppers whether or not...Parts of footwear, incl. uppers whether or not attached to soles other than outer soles; removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof (excl. articles of asbestos) 5.7%
Bars and rods, of iron or non-alloy steel, not...Bars and rods, of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but incl. those twisted after rolling (excl. in irregularly wound coils) 5.3%
Chromium ores and concentratesChromium ores and concentrates 3.9%
See More Products 50.2%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 12.9%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.9%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.8%
Electrical energyElectrical energy 2.2%
Cigars, cheroots, cigarillos and cigarettes of...Cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes 1.7%
See More Products 76.5%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
66.99%
12.78%
7.79%
4.26%
3.48%
1.59%
1.27%
0.59%
0.55%
0.54%
0.16%
- bn USD of services imported in 2011
69.59%
16.97%
4.06%
2.23%
2.23%
2.16%
0.78%
0.67%
0.58%
0.56%
0.17%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of the Economy (in Albanian)
Union of Chamber of Commerce and Industry
Sustainable Economic Development Agency (SEDA)
Statistical Office
National Institute of Statistics
Central Bank
Central Bank
Stock Exchange
Tirana Stock Exchange
Search Engines
Google
Albafind
Economic Portals
Economic news on Albania
Albanian Centre for Competitiveness and International Trade

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Political Outline

Executive Power
The President is the head of state and elected by a three-fifths majority vote of all Assembly members for a 5 year term. Although the position is largely ceremonial, the Constitution does give the President authority to appoint and dismiss some civil servants in the executive and judicial branches. The Prime Minister is the head of the government and holds the executive powers. The Prime Minister is appointed by the President and approved by a simple majority of all members of the Assembly. The Prime Minister nominates the Council of Ministers which must be approved by the President.
Legislative Power
The legislature in Albania is unicameral. The parliament, called People's Assembly, consists of 140 seats, out of which 100 are elected by direct popular vote and the remaining 40 seats are distributed by proportional representation. All members serve 4-year terms. Albanians enjoy limited political rights.
Main Political Parties
A number of political parties operate within the country, but the most important political parties are: the PD (Democratic Party) and the PS (Socialist Party). Albanian society remains very much clan-based. In general, the PD commands the allegiance of the Gheg clans located in the North of the country while the PS has the support of the Tosk clans located in the South. The Greek minority is mostly represented through the PBDNj (Party of the Union for Human Rights). Muslim leaders were prevented from registering a party called Motherland in 2004 because religiously or ethnically based parties are illegal in Albania.
Current Political Leaders
President: Bujar NISHANI (since 24 July 2012) - Democratic Party
Prime Minister: Edi Rama (since 10 September 2013) - socialist Party
Next Election Dates
Presidential election: 2017
Legislative: 2017
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the 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 sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. 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.).

World Rank:
85/180
Evolution:
17 places up compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

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.

Ranking:
Partly Free
Political Freedom:
3/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: January 2015