Albanian economy in 2023 with moderate growth and need for structural reforms

In June 2025, the Institute of Statistics (INSTAT) published the “Supply-Use Tables for 2023,” a key document that offers a detailed overview of the economic structure of Albania. This publication is important for analyzing the dynamics of production, consumption, and investments, reflecting the main developments of the economy during the past year.

The total value of sources and uses in the economy[1] at current prices for 2023 reached around 4.76 trillion lek, marking a nominal increase of 6.8% compared to 2022.

The nominal increase of 6.8% shows that in predetermined economic terms (without correction for inflation), the economy spent and produced more than in 2022. But this increase also includes the rise in prices, so not only more products and services but also higher prices for them.

In real terms, after adjusting for inflation, the value at constant prices[2] is 4.57 trillion lek, which translates into a real economic growth of 2.5%.

The real growth of 2.5% shows that, after removing the impact of price increases, production and consumption have increased their volume by 2.5%. So, the economy has expanded in real terms and is not just a result of higher prices. This is a healthy indicator showing that the economy is growing sustainably and producing more real value.

Gross Domestic Product (GDP)[3] in real terms grew by 4.02%, a positive sign for the economy in general.

This figure is higher than the total real growth of 2.5% of sources and uses because GDP focuses on the final product and does not count some intermediates (like intermediate consumption). A strong GDP increase indicates improvement in economic activity and can have a positive impact on employment, income growth, and living standards.

Structure of sources and production

Domestic production constitutes 76.7% of total sources[4], while imports are 23.3%[5], with faster growth of domestic production (8.8%) compared to imports (1.7%).

The 8.8% growth of domestic production shows strong dynamism in the local economy, contributing to job creation and income growth. This is positive, as it reduces dependence on imports and encourages the development of domestic sectors.

Slower growth of imports compared to domestic production may signal an effort to replace imported goods with domestic production, but mostly constitutes import restrictions due to prices or trade policies. However, dependence on imports remains significant.

The Industry sector is the main source of imports (64.6%)[6]], which shows a large dependence of the industry on imported materials and products.

In the structure of domestic production, the dominant sectors are:

Industry (20.6%). A large part of domestic production comes from industry, indicating the importance of the sector for the national economy.

Trade, Transport, Accommodation and Food Service (21.3%). This service sector is one of the main engines of the economy, reflecting high activity in services and consumption.

Construction (14.6%). A key sector for investments and the physical development of the country, directly affecting employment and economic activity.

Agriculture, forestry and fishing (12.0%). Although smaller than other sectors, agriculture remains an important economic base, especially for rural areas and food security.

This large dependence can be a challenge for the economy, as rising import prices or disruptions in the supply chain can negatively affect industrial production. Also, the growth of industry depends on the ability to secure sufficient and reasonably priced inputs from abroad.

Net taxes on products and trade margins contribute about 6.4% to total sources[7], marking a growth of 2.9%.

The increase of net taxes and trade margins contributes to the growth of economic sources, strengthening the state budget and possibilities for public investments. However, the increase in taxes can affect prices and the competitiveness of businesses, so it must be managed carefully.

Structure of uses and consumption

Intermediate consumption (materials and services used in production) makes up 28.5% of uses[8], where the consumption of material goods dominates (73% of intermediate consumption).

In this part, more than two-thirds of intermediate consumption are material goods (raw materials, semi-finished products, energy, etc.), while the rest are services (transport, marketing, technical services). A high consumption of material goods indicates intensive production activity, where material inputs are essential for production. This is typical for our economy based on industry and construction. On the other hand, a moderate consumption of intermediate services may imply room for developing support services.

Final demand (household consumption, administrative consumption, gross capital formation and exports) is 71.5% of uses[9].

Final consumption for households and public administration is 40.8%, while gross capital formation accounts for 11.6%[10], and exports cover 19.1%.

Most of the final demand goes to consumption by households and public administration, which includes purchases of goods and services for personal use and public services.

By sectors, Industry dominates internal use with 42.1%, followed by Construction (13.5%) and Agriculture (12.8%).

This structure shows that industry remains the main pillar of the use of economic resources, influencing growth and economic development. Construction and agriculture play important roles, reflecting an economy that is still diversified and with sectors linked to infrastructure and food development.

Exports increased by 13.6%, with the main weight of Industry (37.8%) and the Trade, Transport, and Food Service sector (25.9%).

Imports remain high especially in material goods and services for industry, showing continued dependence on external sources.

The Albanian economy for the year 2023 shows steady growth, but its structural challenges and internal dynamics require special attention to ensure long-term development. Essentially, the total value added in the economy reached about 2.06 trillion lek, showing that the economy is able to create real value through productive activities. This is a positive sign also confirmed by the real growth of Gross Domestic Product (GDP) by 4.02% in real terms.

One of the most promising indicators is the increase in employee compensation, which has exceeded 538 billion lek, reflecting an improvement in wages and in the purchasing power of families. This increase in personal incomes translates into greater demand for consumption, which constitutes an essential part of the economic engine. Furthermore, the increase in taxes on production and imports shows a strengthening of public finances, which can be used for developmental policies and strategic investments.

However, the Albanian economy also has visible structural weaknesses that require intervention. The Industry sector, for example, largely depends on imports of materials and services, around 64.6% of inputs come from abroad. This high dependence limits the potential to increase domestic value and develop local production chains, exposing the economy to external shocks such as changes in international prices or availability of goods.

Another important concern is the decrease of gross capital formation by -4.2% in nominal terms. This shows a slowdown of investments, which are essential for modernization and the growth of productive capacities. Without sufficient investments, the economy may stagnate at a slow growth phase and low productivity, thus losing the potential to improve competitiveness and cope with global market challenges.

On the other hand, consumers and businesses are experiencing growth in final and intermediate consumption, but this growth depends on the purchasing power of families and financing possibilities for businesses. This means the economy is sensitive to factors such as inflation and credit conditions, which can affect the stability of economic growth.

In general, the Albanian economy shows real expansion but at moderate rates. This reflects an economic climate that is stable but requires focused measures to increase investments, productivity, and productive capacities. Supportive policies should focus on promoting the development of local supplier sectors to reduce import dependence, improving the business climate, and ensuring easy access to finance for small and medium enterprises.

In the end, the health of the Albanian economy in 2023 is good, reflecting wage improvements, growth in added value, and strengthening of public finances, but the main challenges such as import dependence and investment slowdown must be addressed urgently to ensure sustainable development in the coming years. In this sense, the economy requires a careful balance between maintaining current growth and addressing structural weaknesses that may limit its long-term potential.

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[1] This value represents the total value of all goods and services produced within the country (domestic production), plus those imported and used by the economy during 2023. Current prices are prices that are currently on the market during 2023, without considering the effect of price changes (inflation).

[2] Constant prices are data processed to remove the effect of inflation (price changes). Thus, the value of 4.57 trillion lek shows the real quantity of goods and services produced and used, at a stable price level (usually referring to a base year).

[3] GDP is the total value of all final goods and services produced within the country during a specific period. The real GDP growth of 4.02% shows that the Albanian economy has produced more final value in stable price terms, reflecting a good economic expansion.

[4] This means that more than three-quarters of the goods and services used by the Albanian economy are produced domestically. The domestic source is the main base of the economy and represents internal economic activity.

[5] About one-quarter of sources come from abroad, mainly through imports. This shows that the economy needs goods and services that are not sufficiently produced domestically.

[6] Most imports are related to the industrial sector, which uses many foreign materials and inputs to produce goods. This shows that Albanian industry depends on imports of raw materials, parts, and processed products.

[7] This includes taxes imposed by the state on production and imports (such as VAT, customs) minus subsidies that may be given to businesses. Trade margins represent the difference between buying and selling prices on the market.

[8] Intermediate consumption includes materials and services used by enterprises to produce goods and other services. In this case, 28.5% of total sources is used as input in the production process.

[9] Final demand is the part of sources that goes to consumption directly by end consumers, long-term investments, and exports.

[10] Gross capital formation includes investments in infrastructure, machinery, construction, and changes in stock levels, which are essential for long-term economic growth.