Albania overview

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View list of EBRD projects in Albania

In Albania we focus on supporting governance improvements across the economy, enhancing private sector competitiveness and inclusion through wider access to finance and skills as well as strengthening energy diversification and low-carbon transition.

In Albania we focus on:

  • Support governance improvements across the economy. The EBRD will support the commercialisation and restructuring of key state-owned enterprises, strengthen the corporate governance of firms, improve the quality of institutions and strengthen the rule of law.
  • Enhance private sector competitiveness and inclusion through wider access to finance and skills. The EBRD will foster increased competition through entry/consolidation and a levelling of the playing field. Increased access to finance and promoting entrepreneurship will strengthen economic growth. Improved business skills, standards and business sophistication will improve the competitiveness of domestic firms on local and regional markets. Access to skills development (incl. skills mismatch reduction) will create employment opportunities. The EBRD will also support increased access to infrastructure especially with the goal to unlock economic opportunities for inclusion target groups.
  • Strengthen energy diversification and low-carbon transition. The EBRD will support the creation of a more diversified energy mix with reduced vulnerability to climate change and reinforced networks for domestic and regional connectivity.
  • As well as being a country where the EBRD works, Albania is also an EBRD donor. Albania agreed to contribute up to E36M in grant funding for first-loss risk cover as part of the EBRD €100 million Albanian Agribusiness Support Facility. The Facility was approved in 2015 to promote and enhance access to finance for agribusinesses in Albania.

The EBRD’s latest Albania strategy was adopted on 12 February 2020

Albania's policy response to the coronavirus crisis

The Covid-19 pandemic is affecting the Albanian economy primarily through its negative effect on tourism, which normally contributes to more than a fifth of the country’s GDP. According to the Albanian Tourism Union, around 5 million overnight stays during the summer season have been cancelled this year.

Also, goods exports to Italy, Albania’s main trading partner, fell by more than 40 per cent year-on-year during the most severe lockdown (March to May 2020), and by 15 per cent year-on-year in June-July. Overall, total exports of goods in the first seven month of 2020 were 17 per cent lower in year-on-year terms.

The decline in remittances, which decreased by almost one fifth in the first half of 2020 versus the same period of 2019, has dampened private consumption.

By end-August 2020, the government had adopted two economic support packages, worth 2.8 per cent of GDP. The packages consisted mainly of increased government expenditures to support businesses, sovereign guarantees and one-off social transfers. Monetary policy responded by policy rate cuts, to the record low of 0.5 per cent, while foreign exchange market interventions at the end of March 2020 sought to mitigate depreciation pressures. By mid-2020 public debt stood at 80 per cent of GDP, 14 percentage points higher than at the end of 2019.

Taking everything into account, Albania's GDP is projected to contract by 9.0 per cent in 2020, rebounding by 4.5 per cent in 2021, supported by reconstruction after the earlier earthquake. These forecasts assume no major resurgence of the pandemic.

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EBRD forecast for Albania’s Real GDP Growth in 2021 8.0%

EBRD forecast for Albania's Real GDP Growth in 2022 3.7%

The Albanian economy posted positive growth for three quarters in a row, from the last quarter of 2020 to the second quarter of 2021. In the second quarter of 2021, GDP expanded by nearly 18 per cent on the back of a strong rebound in domestic trade as well as continued growth in industry and the construction sector. Household consumption is benefiting from rising remittances.
Export revenues in the first eight months of 2021 surpassed the comparable period in 2019 by nearly 15 per cent in nominal value as external demand for all sectors grew, including for products outside of the mineral sector which dominates the export basket at nearly 65 per cent. Revenues from service exports, which were nearly four times the size of revenues from goods exports before the pandemic, recovered strongly, but have not yet reached 2019 levels in the first half of the year.
After being subdued in the first five months of 2021, tourism strongly rebounded 39 in the summer season. In June-August, the number of foreign tourists nearly equaled the prepandemic figure.
Monetary and fiscal policies remain accommodative to support the recovery as inflationary pressures remain moderate and the level of inflation is still below the central bank’s target. Earthquake-related reconstruction will continue to boost economic activity in the short term, supported by the Eurobond issuance planned by the end of 2021.
The economy is projected to grow by 8.0 per cent in 2021 and by 3.7 per cent in 2022.

albania in the ebrd's 2021-22 transition report


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