At the beginning of 2026, Albania enters a critical phase of economic development, where the growth of Gross Domestic Product (GDP) is projected to reach around 3.6% according to the International Monetary Fund (IMF), a growth driven mainly by tourism, construction, remittances from emigrants, and strong private consumption.<\/p>\n\n\n\n
This value, which is slightly higher than the IMF\u2019s previous projections of 3.5% in 2025, shows relative economic stability but remains below the post-pandemic average of 4.3%. However, this progress remains fragile due to a persistent phenomenon that still accompanies the Albanian economy: informality, which according to World Bank estimates and regional studies accounts for around 27.9\u201332% of GDP. <\/p>\n\n\n\n
This high level is a structural obstacle with deep consequences<\/em> that continues to distort competition, discourage formal investments, and deepen social inequality, making economic transformation a difficult challenge for the country. In the context of negotiations for European Union (EU) accession, where Albania has already opened the negotiation clusters by the end of 2025, informality threatens to hinder convergence<\/em> with European standards, where GDP per capita is only around 25% of the EU average.<\/p>\n\n\n\n The informal economy includes activities that are fully or partially<\/em> unregistered, untaxed, without social contributions, and non-compliant with legal standards, creating a parallel market that penalizes those operating according to the rules. <\/p>\n\n\n\n A recent study on the Western Balkans shows that informality in Albania reaches up to 30\u201332% of GDP<\/em>, ranking the country alongside North Macedonia and Bosnia as one of the countries with the highest levels of informality in the region. <\/p>\n\n\n\n The consequences for the real economy are tangible. <\/p>\n\n\n\n Informal businesses have operating costs 15\u201340% lower because they avoid VAT payments, profit taxes, social contributions, and necessary licenses, allowing them to offer lower prices and gain market share from formal businesses. For example<\/em>, in the construction sector, informality is linked to money laundering up to 500\u2013700 million euros per year, creating a vicious cycle where dubious investments distort the market and drive away serious investors. The most affected sectors include tourism and hospitality services (where remittances and tourism are key growth engines, but informality reduces tax revenues), retail trade, agriculture (where self-production represents a large part of consumption and is not traded), and small services. <\/p>\n\n\n\n The Investment Council report indicates that around 80% of formal companies consider informality the main obstacle to their sustainable development<\/em>, leading to lower profit margins, difficulties in retaining employees, and obstacles to investments in technology or quality. In fact, according to World Bank data, employment informality reaches up to 70% in some segments, creating a large gap between formal and informal sectors.<\/p>\n\n\n\n Informality also discourages formal investments<\/em>, and this is the most serious long-term effect, as Albania aims to attract foreign direct investments (FDI) at the level of 6% of GDP. <\/p>\n\n\n\n The 2025 U.S. Department of State report on the Investment Climate lists informality as one of the main obstacles, along with corruption, frequent fiscal changes, and weak contracts<\/em>. <\/p>\n\n\n\n Foreign investors perceive the market as insecure, and massive emigration, fueled by poverty and informality, creates a shortage of qualified labor. <\/p>\n\n\n\n According to the 2023 census, the population has declined by 14% since 2011, reducing the working-age population to around 2.4 million. The construction and tourism sectors, dominated by informality, divert productive investments with added value<\/em>, creating a continued dependence on remittances (contributing around 5% of GDP) and tourism and money from dubious sources<\/em>. <\/p>\n\n\n\n This dependence hinders convergence with the EU, as GDP per capita remains low, and the risk of a distorted market makes attracting FDI more difficult. For example<\/em>, the current account deficit is estimated to have widened to 3.5% of GDP in 2025 due to increased imports from higher incomes and public spending.<\/p>\n\n\n\n The social effects of informality are equally serious<\/em>, as informal workers (over 30% of the workforce) do not have adequate access to pensions, health insurance, or legal protection. <\/p>\n\n\n\n This creates a vicious cycle where poverty fuels informality, and informality hinders productivity growth and investments in human capital,<\/em> making economic recovery more difficult. <\/p>\n\n\n\n The poverty rate, which was around 22.5% in 2023, is expected to fall to 20% by 2025, but remains high compared to the region, with around 41% of the population at risk of poverty or social exclusion according to EUROSTAT. This situation has been worsened by still high unemployment (around 8.8% in 2025) and emigration, where around 120,000 pensioners have returned to the labor market due to high living costs. <\/p>\n\n\n\n Moreover, employment informality reaches up to 70% in some sectors<\/em>, leaving vulnerable groups such as youth and women unprotected and increasing inequality, with Albania having the highest inequality in the Western Balkans after Montenegro.<\/p>\n\n\n\n To turn this challenge into an opportunity, the government must intensify structural reform<\/em>s, building on existing progress such as fiscalization and the increase of electronic payments. The pending approach includes strengthening the tax administration and combating evasion through the Medium-Term Revenue Strategy, integrating data from banks and property registries to assess taxpayers and reduce informality in sectors such as construction. <\/p>\n\n\n\n In fact, the government has announced a 3-year plan to reduce cash usage, in cooperation with the Bank of Albania, aiming to fight informality and increase business competition. <\/p>\n\n\n\n Anti-informality campaigns, such as “Zero Tolerance” against informal employment, registered over 1,300 informal workers in 2025, adding around 15 million lek to the state budget. Reducing cash usage and digitalization are essential, promoting electronic payments and penalizing large cash transactions, as this will target money laundering in construction and tourism, creating a fairer environment for formal businesses. Increasing incentives, such as VAT reductions for card payments, will increase market transparency and aim to raise tax revenues to 28% of GDP.<\/p>\n\n\n\n Employment and human capital reforms<\/em> will help validate non-formal and informal skills through the UNDP Roadmap, integrating informal workers into the formal system. Improving the unemployment policy scheme, providing training and support for vulnerable groups such as long-term unemployed and youth, will reduce emigration and attract investments in productive sectors, addressing the shortage of qualified labor. <\/p>\n\n\n\n According to Albania\u2019s Agenda Reform<\/em>, measures include strengthening the unemployment employment scheme to improve mediation and training services, reducing unemployment, and promoting gender equality in access to work. Improving the investment and governance climate requires extending the Strategic Investment Law and adopting the Unified Investment Law,<\/em> ensuring property transparency and state support. <\/p>\n\n\n\n The fight against corruption through justice reforms will reduce state capture and attract FDI in renewable energy, technology, and agriculture. Partnerships with the private sector will ensure that reforms reflect real market needs, including the development of human capital and digital transformation.<\/p>\n\n\n\n Monitoring and evaluating results requires creating an inter-institutional task force to monitor informality, using real-time data from INSTAT and the Bank of Albania, with the objective of reducing informality by 5% during 2026 and measuring the impact on investment and employment to ensure that policies are effective. <\/p>\n\n\n\n For comparison, here is a simple table showing informality levels in the region (based on World Bank assessments and recent studies):<\/p>\n\n\n\n In 2026, Albania has the opportunity, as in previous years, to move from an economy dependent on informality toward a sustainable model, leveraging EU integration as a catalyst. <\/p>\n\n\n\n The known effects such as unfair competition, discouragement of investments, and social inequality can no longer be ignored. With specific policies supported by political commitment and international cooperation, informality can be reduced below 20% of GDP by 2030, creating a fairer and more prosperous Albania. <\/p>\n\n\n\n The government, business, and civil society must unite, because the time for zero tolerance toward \u201cshadows\u201d has come and passed.<\/p>\n","protected":false},"excerpt":{"rendered":" At the beginning of 2026, Albania enters a critical phase of economic development, where the growth of Gross Domestic Product (GDP) is projected to reach around 3.6% according to the […]<\/p>\n","protected":false},"author":2,"featured_media":24776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[9756],"tags":[10918,9968,8240,9827,9208,11849,9887],"class_list":["post-24775","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-competition","tag-economic-growth-en-2","tag-gdp","tag-informality-en-2","tag-investment","tag-remittances","tag-tourism-en-2"],"featured_image_src":{"landsacpe":["https:\/\/altax.al\/wp-content\/uploads\/2026\/01\/informality-economic-growth-gdp-investment-competitio-1-768x445.jpg",768,445,true],"list":["https:\/\/altax.al\/wp-content\/uploads\/2026\/01\/informality-economic-growth-gdp-investment-competitio-1-463x348.jpg",463,348,true],"medium":["https:\/\/altax.al\/wp-content\/uploads\/2026\/01\/informality-economic-growth-gdp-investment-competitio-1-300x225.jpg",300,225,true],"full":["https:\/\/altax.al\/wp-content\/uploads\/2026\/01\/informality-economic-growth-gdp-investment-competitio-1.jpg",768,576,false]},"yoast_head":"\nCountry<\/strong><\/td> Informality Level (% of GDP)<\/strong><\/td> Expected GDP Growth 2026<\/strong><\/td><\/tr><\/thead> Albania<\/td> 27.9\u201332%<\/td> 3.6%<\/td><\/tr> North Macedonia<\/td> 25\u201330%<\/td> 3.2%<\/td><\/tr> Bosnia-Herzegovina<\/td> 28\u201335%<\/td> 2.8%<\/td><\/tr> Serbia<\/td> 20\u201325%<\/td> 3.5%<\/td><\/tr> Montenegro<\/td> 22\u201328%<\/td> 3.2%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n