Albania’s economic performance in 2024

Albania’s economy demonstrated resilience and moderate growth in 2024, maintaining its trajectory toward sustainable development. The Gross Domestic Product (GDP) expanded by an estimated 3.7%, underpinned by strong performances in key sectors such as tourism, energy production, and construction. The country’s macroeconomic stability was bolstered by a combination of domestic reforms and favorable external conditions, including a stable Eurozone economy that supported Albania’s export-oriented industries.

Foreign Direct Investment continued to play a pivotal role in Albania’s economic landscape in 2024. The total FDI inflows reached approximately €1.1 billion for the first 9 months of 2024, marking an increase of 8% compared to the same period of 2023. Investments were concentrated in renewable energy, with several photovoltaic and wind farm projects initiated, and in infrastructure, including the commencement of major road and port development projects. The government’s ongoing efforts to streamline business registration processes and improve regulatory frameworks have contributed to this upward trend, despite lingering bureaucratic challenges.

Unemployment in Albania dropped to 9.5% in 2024, the lowest level recorded in over a decade. Job creation was driven by the expansion of the tourism sector, significant infrastructure projects, and growth in the services industry. However, youth unemployment remained a pressing issue, standing at 19.2%. Wages saw an upward revision, with the average gross monthly salary increasing by 6.4%, reaching 77,000 ALL in Q3 2024. The government’s policies to raise public sector wages and implement minimum wage adjustments contributed significantly to this growth. Despite these improvements, wage disparities between the private and public sectors persisted, posing a challenge for the broader labor market.

In 2024, the Albanian government introduced a pension reform aimed at addressing long-term sustainability and adequacy issues in the social security system. Monthly pensions were increased significantly, benefiting over 600,000 retirees. However, despite these adjustments, pensions in Albania remain low relative to the cost of living and comparable standards in the region. Many retirees continue to struggle with financial insecurity, highlighting the need for further reforms. Proposals for a more comprehensive pension system include diversifying funding sources, improving collection efficiency, and aligning benefits more closely with contributions. The government has also been urged to consider supplementary pension schemes and private sector participation to ease the burden on public finances.

Justice reform remained a cornerstone of Albania’s broader governance strategy in 2024. The vetting process for judges and prosecutors continued, aiming to restore public trust in the judiciary and create a more favorable investment climate. This process resulted in the removal of several high-ranking judges and prosecutors implicated in corruption or abuse of power. Notably, the justice system saw the prosecution of several officials and business elites, who were convicted of embezzlement and misuse of public funds. These high-profile cases signaled a significant shift in the enforcement of anti-corruption measures, reinforcing Albania’s commitment to transparency and accountability. The reforms also targeted improvements in contract enforcement and property rights, two areas where Albania has historically underperformed. The increased confidence in the judicial system is expected to facilitate a healthier business environment and attract further investments.

Additionally, the Albanian government rolled out several key initiatives in 2024 to foster economic growth and enhance the country’s competitiveness. The National Digital Transformation Strategy focused on expanding digital infrastructure, promoting e-governance, and supporting the growth of the tech sector. The government allocated €150 million for digitalization projects, aiming to position Albania as a regional hub for technology and innovation. Green energy transition was another priority, with support from international financial institutions enabling Albania to accelerate its shift to renewable energy. New solar and wind energy projects added over 200 MW to the national grid, reducing the country’s dependence on hydroelectric power. Additionally, Albania finalized its integration into the Single Euro Payments Area (SEPA), simplifying cross-border transactions and reducing costs for businesses and individuals. This milestone is expected to enhance Albania’s attractiveness as an investment destination and support its EU integration agenda.

Furthermore, in the World Bank’s 2024 Ease of Doing Business survey, Albania climbed five places to rank 77th globally. Notable improvements were observed in the categories of starting a business and registering property. However, the country still lags in areas such as enforcing contracts and dealing with construction permits. Additionally, Albania advanced to 65th position in the World Economic Forum’s Travel and Tourism Competitiveness Index, reflecting progress in infrastructure development and tourism marketing initiatives. The country welcomed over 11 million tourists for the period January to November 2024, a 15.8% increase compared to the previous year.

Albania’s economic performance in 2024 highlights a nation on the path to greater economic resilience and opportunity. The steady growth, driven by strategic investments and comprehensive reforms, reflects significant progress. However, persistent challenges such as low pensions, high youth unemployment, and elevated public debt underscore the need for continued focus on structural reforms. By addressing these issues and capitalizing on its strengths in sectors like tourism, energy, and digital transformation, Albania has the potential to achieve more inclusive and sustainable growth in the coming years.