Albania: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
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, with an estimated GDP per capita of around USD 4,000 in 2008. Therefore, nearly 20% of the population still lives below the poverty threshold. More than 50% of the GDP is made up by the informal economy, a fact which has hindered the current economic reform program. In addition, the country is very dependent on remittances from Albanians working abroad, mainly in Greece and Italy. Despite a slight inflation increase in 2008, the rate is relatively stable and it has remained at about 3%.
The signing of the Stabilization and Association Agreement with the European Union, on June 12, 2006, represents a significant development for Albania's partnership with European countries. The current government is pursuing a program focused on the struggle against corruption, organized crime and trafficking; and it is establishing liberal-inspired reforms aimed at preparing Albania for a future membership to the EU and at attracting foreign investors.
Since Albania is moderately integrated in the global capital flows, the impact of the economic crisis was less spectacular than in other countries of Eastern Europe. Despite this, the economy was not prosperous in 2008, its debt was doubled, exports were half of their usual and there was a significant decline on the remittances from the Albanians living abroad.
Despite the financial crisis, the country's GDP made progress in 2009 attaining 3%, and 2% in 2010, which was mainly due to the healthy condition of the construction and services sectors. The development of the country in the next following years could equally be benefited by the perspective of an official candidature to become a member of the European Union. According the Albanian government, the country should revive with a growth of more than 5% in 2011.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 12.17 | 11.90e | 13.29e | 14.22 | 15.11 |
| GDP (Constant Prices, Annual % Change) | 3.3 | 3.5e | 2.5 | 3.5 | 4.2 |
| GDP per Capita (USD) | 3,819e | 3,716 | 4,131 | 4,396 | 4,650 |
| General Government Gross Debt (in % of GDP) | 59.8 | 58.2 | 59.4e | 59.2 | 59.6 |
| Inflation Rate (%) | 2.2 | 3.6e | 3.9e | 3.5 | 2.9 |
| Unemployment Rate (% of the Labor Force) | 13.1 | 12.5 | 11.5 | 11.0 | 10.5 |
| Current Account (billions USD) | -1.65 | -1.40e | -1.45e | -1.39 | -1.38 |
| Current Account (in % of GDP) | -13.5 | -11.8e | -10.9 | -9.2 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
The share of agriculture in the GDP is about 20%. The sector employs almost 60% 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.
The industrial sector accounts for about 20% of the country's GDP and employs 15% 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 represents close to 60% of the GDP and employs a fourth of the active population. 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 a parallel direction, the share from the services sector is increasing each year and the Albanian economy has been led notably by the dynamism of the services sector (tourism, telephony, banking and insurance).
The sectors of telecommunications, energy, minerals and medical equipment are expected to develop in the next following years and they offer good opportunities.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 58.0 | 13.5 | 28.4 |
| Value Added (in % of GDP) | 20.5 | 19.6 | 59.9 |
| Value Added (Annual % Change) | 2.6 | 7.0 | 7.0 |
Source: World Bank - Last Available Data.
| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Albanian Lek (ALL) - Average Annual Exchange Rate For 1 USD | 98.10 | 90.43 | 83.89 | 94.98 | 103.94 |
Source: World Bank - Last Available Data.
Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
See the Country Risk Analysis Provided By Ducroire.
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 (14.5% of total imports), metals, vehicles and means of transport (6.7% of imports). Albania's main suppliers are Italy, Greece, Turkey and Germany. The country mainly exports mineral ores (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, Greece, China, Serbia and Montenegro. The European Union provides 40% of Albanian imports and accounts for 80% of Albanian exports.
The trade deficit reached 29% of the GDP in 2007. 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 drop of 15% in 2008, this decrease has continued in 2009 and 2010 since Albania's commercial partners, also affected by the crisis, have reduced their demand for Albanian products.
| Foreign Trade Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Imports of Goods (million USD) | 3,058 | 4,188 | 5,251 | 4,550 | 4,601 |
| Exports of Goods (million USD) | 798 | 1,078 | 1,355 | 1,091 | 1,550 |
| Imports of Services (million USD) | 1,552 | 1,893 | 2,361 | 2,215 | 1,893 |
| Exports of Services (million USD) | 1,481 | 1,924 | 2,420 | 2,348 | 2,109 |
| Imports of Goods and Services (Annual % Change) | 7.8 | 28.2 | 21.1 | -12.0 | -9.1 |
| Exports of Goods and Services (Annual % Change) | 5.2 | 7.7 | 7.1 | 5.9 | 4.2 |
| Imports of Goods and Services (in % of GDP) | 49.2 | 55.0 | 56.1 | 54.2 | 51.4 |
| Exports of Goods and Services (in % of GDP) | 25.1 | 28.8 | 29.5 | 28.6 | 29.7 |
| Trade Balance (million USD) | -2,123 | -2,900 | -3,552 | -3,216 | -2,757 |
| Trade Balance (Including Service) (million USD) | -2,204 | -2,880 | -3,453 | -2,965 | -2,525 |
| Foreign Trade (in % of GDP) | 74.2 | 83.7 | 85.6 | 82.8 | 81.1 |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| Italy | 50.8% |
| Serbia | 8.3% |
| Turkey | 6.0% |
| China | 5.5% |
| Greece | 5.4% |
| See More Countries | 24.0% |
| Main Suppliers (% of Imports) |
2010 |
| Italy | 28.2% |
| Greece | 13.1% |
| China | 6.3% |
| Turkey | 5.7% |
| Germany | 5.6% |
| See More Countries | 41.1% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
Source: Worldwide Press Freedom Index 2010, Reporters Without Borders
Map of freedom 2010
Source: Freedom House
Any Comments About This Content? Report It to Us.
© Export Entreprises SA, All Rights Reserved.
Last Updates: January 2012