Albania’s economy grew by 3.63% in Q1 2024
In the first quarter of 2024, Albania’s economy demonstrated notable growth, with a real GDP increase of 3.63% compared to the same period in 2023, as reported by INSTAT. This growth was driven by various sectors, notably construction and an increase in public spending, alongside a significant rise in consumer spending.
Why is this relevant
This level of growth highlights the resilience and potential of Albania’s economy, offering insights into the sectors driving progress and those needing support. Economic growth for Q1 2024 was higher than last year’s and better than what was projected by the IMF and the World Bank.
The construction sector played a pivotal role, contributing 1.19 percentage points to the overall growth. This sector’s robust performance is a cornerstone of Albania’s economic expansion, driven by increased investments in infrastructure and housing.
Public administration, education, and healthcare sectors collectively added 0.92 percentage points, reflecting the positive impact of higher public sector wages and improved service delivery.
Other notable contributors include trade, transport, accommodation, and food services, which together added 0.76 percentage points. This boost is partly due to a surge in tourism, a sector recovering strongly post-pandemic. Additionally, real estate activities contributed 0.36 percentage points, professional and administrative services added 0.32 percentage points, and the information and communication sector added 0.06 percentage points.
Conversely, the agriculture, forestry, and fishing sector negatively impacted the growth by 0.31 percentage points, and the industry, energy, and water sector by 0.15 percentage points. These sectors, vital for employment, faced challenges that need addressing to ensure balanced economic growth.
The Q1 2024 economic data also indicate that net taxes on products contributed positively by 0.36 percentage points, underscoring the government’s role in supporting economic activities through fiscal policies.
Consumer spending, a critical indicator of economic health, increased by 3.7% in Q1 2024. This rise in consumption outpaced the growth of public administration spending, highlighting a robust domestic demand. This increase also aligns with higher imports, although exports faced a downturn due to the strong valuation of the euro, affecting the competitiveness of Albanian products.
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