BAKU, Azerbaijan, February 27. Albania's economy showed stronger-than-expected performance in 2024, with growth estimated at 3.9 percent, surpassing earlier projections, according to the European Bank for Reconstruction and Development (EBRD), Trend reports.
This growth was primarily driven by a robust tourism sector, growth in other services, and a booming construction industry, although industrial and agricultural production both experienced declines. Private consumption and public investment were pivotal in sustaining economic momentum, while goods exports faltered due to the appreciation of the lek and weak external demand, contributing to a widening current account deficit.
Inflation in Albania fell to an average of 2.2 percent in 2024, allowing the Bank of Albania to reduce the base rate from 3.25 percent in early 2024 to 2.75 percent by February 2025. The financial sector remained stable, bolstered by a surge in credit activity.
Looking ahead, Albania’s growth forecast for 2025 and 2026 is set at 3.7 percent, but this projection comes with both opportunities and risks, the EBRD noted.
The expected continuation of structural reforms, a strong commitment to EU accession, and potential access to EU funds and financing present significant upside potential for the economy. However, downside risks include weakening demand from the eurozone, a potential drop in remittances, and the possibility of a weaker tourism season compared to the previous year. Additionally, adverse climate conditions, particularly the risk of droughts, could harm energy production and necessitate higher electricity imports. While the increase in solar energy capacity offers some mitigation, these challenges remain a concern for the country’s future growth trajectory.