Balance of payments 2024-2025

The Albanian economy in 2024–2025 recorded a marked improvement in its external position, as reflected in the Bank of Albania’s Balance of Payments data. The current account narrowed significantly (from a higher deficit in 2024 to substantially lower levels in 2025), foreign reserves reached record levels, tourism posted historic figures (inflows €5.724bn, outflows €3.039bn, net contribution +€2.685bn), remittances remained robust (+€1.119bn, +7.1%), and Foreign Direct Investment (FDI) maintained a high level (€1.635bn gross inflows in 2025).

Nevertheless, this success falls well short of deep structural transformation. Economic growth continues to rely primarily on domestic consumption, services (tourism and real estate), and external flows (remittances + tourism), while the productive sector remains weak. The goods trade deficit deepened further (−€5.956bn in 2025), underscoring the high dependence on imports and the weakness of the domestic productive base.

4 Key Findings

1. External position improvement — The current account narrowed sharply, driven by strong tourism and remittance contributions. Foreign reserves grew to record levels (+€1.13bn), strengthening exchange-rate stability and the capacity to withstand external shocks.
2. Record tourism performance — Inflows from foreign tourists reached €5.724bn, while Albanian residents’ spending abroad was €3.039bn, yielding a net contribution of +€2.685bn. This sector remains the primary engine of services growth and current account improvement.
3. Stable role of remittances and FDI — Migrant remittances (+€1.119bn) continue to support private consumption. FDI maintained high levels (€1.635bn), but with a clear orientation toward real estate (up to 34.3% of the total in 2025, +48% year-on-year).
4. Absence of structural transformation — Despite the macro successes, the goods trade deficit deepened (−€5.956bn in 2025). Productive sectors (extractive, manufacturing, agriculture) are losing relative weight, while new FDI flows are oriented toward real estate, trade, and construction. Without tourism and remittances, the current account would be deeply negative.

3 Key Structural Risks

5. Extreme dependence on seasonal tourism — Tourism contributes massively to the balance of payments, but approximately 49% of inflows derive solely from Q3. A shock to the summer season (climate change, reputational damage, regional competition or global crisis) could have a cascading negative effect across the entire economy.
6. Long-term dependence on remittances — Emigrant inflows remain an important source (+7.1% in 2025), but demographic decline, continued youth emigration, and population ageing risk gradually eroding this flow, affecting private consumption, fiscal stability, and the exchange rate.
7. Non-productive orientation of FDI — Foreign investment flows are shifting increasingly toward real estate (from 23% in prior stock to 34.3% of 2025 flows), while the share going to industry, modern agriculture, and technology is falling. As a result, FDI generates few new exports, value chains, or sustainable jobs, and does not help narrow the long-term goods trade deficit.

3 Priority Policy Actions (Short- and Medium-term)

8. Redirect FDI toward productive and export-oriented sectors — Targeted policies should be designed (fiscal incentives, administrative facilitations, public-private partnerships) to attract investment into manufacturing, high-value agriculture, renewable energy, and technology. The objective is to create real exports and reduce import dependence.
9. Diversify and formalise tourism — Beyond the summer-season model, develop cultural, mountain, health, and conference tourism year-round. Improve service quality, infrastructure, and sustainable marketing to make the sector more resilient to shocks.
10. Channel remittances toward productive investment — Create attractive financial instruments (investment funds, diaspora bonds, tax incentive schemes) that convert a portion of remittances into productive capital at home, rather than flowing primarily into consumption.

These measures, supported by a national strategy for import substitution and strengthening domestic production competitiveness, are essential to transition from an external-flow-based growth model toward sustainable, productive, and resilient development. Without them, the successes of 2024–2025 may prove temporary.