Albania's economic growth is projected to remain strong in 2024 at 3.3%, supported by private consumption, tourism, and construction. The World Bank's Western Balkans Regular Economic Report anticipates a slight acceleration to 3.4% in 2025.
The country has seen a decrease in poverty levels, aided by rising labor income and increased employment, particularly in the private sector where wages have risen by an average of 12.7% over the past year. Inflation is gradually declining, and budget revenues have experienced an 8% year-on-year increase as of July 2024.
Albania's future economic prospects are tied to global economic recovery and ongoing structural reforms. Its aspirations for European Union membership guide its progress. Achieving higher growth requires government reforms to enhance productivity, improve the business climate, and deepen international market integration.
The report forecasts that collective economic growth for Albania and its regional neighbors—Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia—will reach 3.7% in 2025, revised upward by 0.2 percentage points from earlier estimates. For 2024, the growth rate is expected at 3.3%, up by 0.1 percentage point from initial projections.
"Domestic factors continue to support a moderate acceleration of growth in the Western Balkans," said Isolina Rossi, economist at the World Bank and lead author of the report. "In addition...the gradual recovery of economic activity in the European Union is expected to play a crucial role by bolstering exports from the region." She also highlighted vulnerabilities such as sluggish global growth and political uncertainty.
As economic conditions improve across the Western Balkans, living standards are gradually aligning with more advanced EU economies. Sustaining this momentum necessitates structural reforms outlined in the EU’s Growth Plan.
"Economic integration is a key driver of growth for small economies such as those in the Western Balkans," stated Xiaoqing Yu, World Bank Country Director for the region. He emphasized enhancing trade with both regional partners and the EU while addressing demographic challenges through human capital development.
Migration remains a significant factor affecting regional development. While emigration poses challenges like labor shortages, it offers opportunities when managed effectively—such as poverty alleviation through remittances or skill transfers upon migrants' return home.
To harness migration benefits fully, policy recommendations include developing skills training programs with destination countries and expanding social security agreements; enhancing migrant protections; facilitating capital transfer from diasporas; and using digital tools for better migration management.
For further information on this report or previous editions:
Contacts:
Vienna: Filip Kochan (fkochan@worldbank.org)
Belgrade: Gordana Filipovic (gfilipovic@worldbankgroup.org)
Pristina: Lundrim Aliu (laliu1@worldbank.org)
Skopje: Anita Bozinovska (abozinovska@worldbank.org)
Sarajevo: Jasmina Hadzic (jhadzic@worldbank.org)
Tirana: Ana Gjokutaj (agjokutaj@worldbank.org)