Macroeconomic and Fiscal Framework for the period 2026–2028 and comparison with the period 2022–2024

This analysis addresses the expected developments and trends of the Albanian economy during the 2026–2028 period, comparing them with the 2022–2024 period and offering a deep perspective on the successes and weaknesses of economic and fiscal policies.

The analysis covers various aspects of the economy, including GDP developments, fiscal policies and public debt, public investments, the labor market, inflation, the export sector, as well as the challenges of economic diversification and sustainable development.

1. Economic developments and GDP Performance

Comparison with the 2022–2024 period

During the 2022–2024 period, the Albanian economy experienced stable growth, with an average annual growth rate of around 4.2%, mainly driven by the tourism and construction sectors. The highest growth rate was recorded in 2022, at 4.8%, following a strong post-pandemic recovery. However, 2023 and 2024 marked a slowdown in growth, with only 3.9% average growth, reflecting an economic stabilization after major crises.

For the 2026–2028 period, a more stable growth is projected, with an average growth rate of 4.0% per year. This may be considered a slowdown compared to the post-pandemic recovery years, and this development has sparked debates regarding the structural capacity of the economy to generate sustainable growth. Economic growth remains largely dependent on the services and construction sectors, while the contribution of the industrial and agricultural sectors remains low.

Comment by ALTAX

Stability in economic growth for the 2026–2028 period indicates that the Albanian economy has moved out of the uncertainty phase and is now in a stable development stage. This may contribute to a more favorable climate for long-term investment and development.

However, the slowdown in the growth rate suggests that the economy’s full potential is not being utilized. The industrial and agricultural sectors, two possible pillars of sustainable development, remain underdeveloped and are not making the necessary contribution to enhance economic diversification.

2. Fiscal policies and public debt

Comparison with the 2022–2024 period

In the 2022–2024 period, fiscal policy was oriented toward recovery from pandemics and the aftermath of the earthquake, leading to a high fiscal deficit in 2022 (4.6% of GDP), which decreased to 2.6% by 2024. Public debt also saw a significant reduction, from 74.1% in 2022 to 55.2% in 2024, having a positive impact on macroeconomic stability.

In the 2026–2028 period, the objective of fiscal policies is fiscal consolidation, with a projected deficit of 1.0% of GDP by 2028 and public debt expected to reach 52.1%. Fiscal policies are oriented towards debt reduction and stabilization of public finances, but have been criticized for the potential impact on long-term growth, as they may limit opportunities for necessary investments in infrastructure and development.

Comment by ALTAX

Fiscal consolidation is a positive step toward stabilizing the economy and enhancing Albania’s credibility in international markets. The implementation of a “golden rule” for capital expenditures is a measure that helps keep debt under control and favors long-term value investments.

Tight fiscal policies may hinder long-term economic development, as capital investments remain low in relation to GDP (only 5.9%), and Albania has major infrastructure needs. The reduction in public debt also does not meet the EU’s debt target of 45%.

3. Public investments and the private sector

Comparison with the 2022–2024 period

In the 2022–2024 period, public investments were around 6.0% of GDP and contributed significantly to the economic recovery after successive crises. However, for the 2026–2028 period, public investments are expected to stabilize at 5.9% of GDP, including new projects as well as those that are part of the European Union’s New Growth Plan.

Comment by ALTAX

Stabilization of public investments may support long-term development and stimulate economic growth, also contributing to the strengthening of the private sector.

The level of investment is still insufficient to cover the country’s significant infrastructure needs. Policies to attract foreign direct investments are essential to diversify the economy and reduce dependence on the services and tourism sectors.

4. Unemployment and the labor market

Comparison with the 2022–2024 period

During the 2022–2024 period, unemployment fell from 12.0% to 11.2%, enabling many individuals to find employment in the services and construction sectors. For the 2026–2028 period, a gradual decline in unemployment is projected to 9.0%, with employment growth expected to be minimal (0.6% average per year).

Comment by ALTAX

The reduction in unemployment is a positive sign suggesting an improvement in the labor market and increased participation in economic activity.

Emigration and negative demographic trends continue to strongly affect the country’s labor force, increasing challenges for the long-term development of the labor market.

5. Inflation and monetary stability

Comparison with the 2022–2024 period

Inflation saw a significant increase in 2022, reaching 6.7% due to rising food and energy prices, but dropped to 2.2% by 2024. In the 2026–2028 period, inflation is expected to stabilize at 3.0%, in line with the objectives of the Bank of Albania.

Comment by ALTAX

Price stability and a more controlled level of inflation will help create a favorable environment for investment and consumption growth.

Policies for controlling inflation may be limited by external factors, such as international energy prices, and concerns about the future of energy and natural resources.

6. Exports and the balance of payments

Comparison with the 2022–2024 period

Albania’s exports recorded a 4.8% increase in 2024, with a rise in service exports, particularly tourism. However, goods exports remain low and insufficiently diversified. For the 2026–2028 period, exports are expected to grow at a slower pace, still highly concentrated in tourism and the services sector.

Comment by ALTAX

The growth of service exports indicates the potential for developing tourism as an engine of economic growth.

The economy’s dependence on tourism may jeopardize the stability of the balance of payments in case of a slowdown in this sector, making it necessary to diversify goods exports.

The 2026–2028 period, according to the Macroeconomic and Fiscal Framework 2026–2028, will be a period of stabilization and consolidation of economic growth, with a strong focus on reducing public debt and strengthening the labor market.

However, many challenges remain, including the economy’s dependence on the services and tourism sectors, the need to diversify exports, and the uncertainty arising from demographic trends and emigration.

This analysis attempted a deep assessment of Albania’s economic developments during the 2026–2028 period, offering a clear overview of the main achievements and challenges.

While the economy is expected to enter a phase of stabilization and consolidation, achieving sustainability objectives remains a key challenge.

It is essential that economic and fiscal policy focuses not only on maintaining macroeconomic stability but also on addressing the structural weaknesses of the economy. Diversifying economic sectors, strengthening export competitiveness, and improving labor market conditions are necessary steps to ensure sustainable growth and meet citizens’ expectations.

In conclusion, the 2026–2028 period presents an opportunity for Albania to consolidate economic stability and build stronger foundations for long-term development. However, this success will depend on the ability to address existing challenges and implement bold and effective reforms.