Macroeconomic and fiscal indicators of Albania

Economic growth in 2023 is estimated at 3.5%, supported by strong government consumption and some influential sectors such as construction and tourism and energy exports (see Table).

The country had an exceptionally good tourist season in 2023, with the result that at the end of 2023 visitor inflows of up to 4 billion Euros are calculated.

For the year 2023, the current account deficit is estimated to have dropped to a historically low level of -2.6% of GDP.

Due to strong capital inflows, the national currency has appreciated against the euro by 11%.

But the inflow of money from immigrants and companies connected to tax havens has its own impact on the large devaluation of hard currencies and the overvaluation of the lek.

This had consequences for exports of goods, which fell by about 10%. The central bank has already taken measures during 2023 to prevent further appreciation of the local currency, but this will be difficult, as remittances and foreign direct investment inflows are expected to be strong in 2024.

Last year, Albania had the lowest inflation of all BP6 countries, averaging 4.8%. However, the real disposable income of households, especially of the most vulnerable groups, was softened by the inflation rate of food commodities, which resulted in 9.5%. Despite the good GDP growth rate, employment growth remained weak.

In Q4 2023, unemployment increased from 10.6% to 10.7%, year-on-year, while in the same period youth unemployment increased from 20.5% to 22%.

The salary reform in the public sector, which aims to increase them to an average of 900 euros per month in 2024, is likely to spread to private sector salaries as well. The reform will bring some costs to the budget, although the budget deficit is expected not to exceed the level of 2% of GDP