Unequal growth in 2025, as structural economic gap becomes more pronounced

The latest data for the fourth quarter of 2025 from INSTAT[1] confirm a trend that is consolidating as a defining feature of the Albanian economy: growth that appears solid on the surface, but which in composition carries a deep structural shift. In analytical terms, we are dealing with an economy that is expanding, but not in a balanced way, gradually creating a measurable structural economic gap that reflects the difference between current growth and a more sustainable development model.

At the sectoral level, service data clearly show that the main growth driver comes from activities linked to tourism and consumption. The 12.3% growth in hotels, 7.1% in bars and restaurants, and 3.8% in travel agencies is not merely a cyclical expansion, but a sign of the strengthening of an economic model based on tourist demand. At the same time, the 36.4% expansion in real estate activities signals a strong concentration of capital in non-productive assets, making this sector not only the most dynamic, but also one of the most decisive for the overall direction of the economy.

This expansion is accompanied by a significant increase in employment and income indicators, with wages rising by 22.5% in hotels and up to 30% in real estate. At first glance, this suggests an improvement in well-being, but a deeper analysis reveals a disconnect between income growth and the real productivity base, creating internal tensions within the economic structure.

This is because growth in services is not evenly distributed. The -1.4% decline in information and communication and the effective stagnation in legal and accounting activities (+0.3%) indicate that higher value-added sectors are not keeping pace. This creates a clear asymmetry: the economy is growing, but is also shifting toward activities with relatively lower productivity and higher sensitivity to economic cycles.

When this picture is compared to the production sector, the contrast becomes essential for understanding the nature of this structural gap. Data show a persistent weakness in goods production, with overall industry falling by -2.0%, extractive industry by -8.7%, and energy by -10.0%. At the same time, declines in capital goods (-10%) and energy (-12.6%) signal not only a contraction in current activity but also a weakening of long-term productive potential. Manufacturing remains at the limits of stabilization but without sufficient growth to offset declines in other sectors, while construction, with a 3.1% increase, remains the only segment continuing to support this block.

This creates a clear functional division within the economy. One expanding block consists of tourism, services, and real estate, and a weakening block consists of industry, energy, and production. This division reflects a structural reconfiguration, where the weight of productive sectors is shrinking relative to consumption-oriented sectors and asset investments.

In this context, the structural economic gap becomes measurable in several dimensions. First, there is a structural gap of approximately 10–13 percentage points, reflecting the difference between the current weight of productive sectors (around 20–22% of the economy) and a more balanced structure (30–35%). Second, there is a productivity gap of 10–15 percentage points, as wage growth in dominant sectors, up to 30%, significantly exceeds actual output growth, which remains in the 3–5% range. Third, there is an investment gap of around 20 percentage points, since approximately 60–65% of capital is concentrated in construction and real estate, while industry and technology remain underfunded.

Aggregated, these elements translate into an overall structural deviation of about 14–15%, indicating that the Albanian economy operates significantly below a balanced development trajectory. This makes it clear that the 3–4% economic growth does not represent a deep transformation but rather an expansion concentrated in specific sectors, with a limited contribution to long-term productive capacity.

Consequently, the current economic model can be characterized as service- and construction-driven, where growth is supported by tourism, consumption, and real estate investments, while production and high-productivity sectors remain peripheral. This model is capable of generating short-term growth but simultaneously creates a high dependency on seasonal and cyclical factors, increasing vulnerability to external shocks and limiting the potential for long-term convergence.

Against this background, the outlook for 2026 remains constrained by the continuation of these trends. In the absence of structural interventions, the economy is expected to maintain growth rates but without changing its composition. This implies that the structural economic gap will not only fail to narrow but risks widening, making growth increasingly less sustainable and inclusive. In conclusion, the data show that the primary challenge for the Albanian economy is not the absence of growth but the absence of transformation. Without a clear reallocation of capital, labor, and policies toward productive sectors and those with higher added value, the economy will continue to grow on a fragile basis, where the gap between growth and development remains the main structural problem.

[1] https://www.instat.gov.al/media/mmzbyloj/prodhuesit-e-t%C3%AB-mirave-t4-2025.pdf