Advanced Search

News

Home » About Albania» Economy » Macroeconomic Data

Macroeconomic Data

Albania is a lower middle income country with a gross domestic income per person of $3412 in 2007.The country has made significant progress since its transition from a communist regime towards a market-based economy. Albania has pursued major structural and economic reforms and has pushed ahead with the establishment of democratic institutions. With the exception of the pyramid crisis of 1997, it has achieved and sustained strong economic growth, while containing inflation in almost every year. The economic structure has shifted from agriculture and industry to services and construction.

Macroeconomic stability was quickly restored and economic growth recovered following the 1997. Officially-estimated real GDP growth averaged 7 percent a year during 1998-2007, one of the highest in Eastern Europe and Central Asia (ECA). High GDP growth rates have been accompanied by a massive reduction in poverty. The absolute poverty rate fell from 25.4 percent in 2002 to 18.5 percent in 2005, lifting roughly one quarter of the poor in 2002 out of poverty.
Albanian economy has proven quite resilient in front of several external and internal negative shocks that hit it during 2006 and 2007, as indicated by the accelerating economic growth during 2007.
Monetary and financial policies fostered confidence in the national currency (Lek) and spurred credit to the private sector. Inflation has been maintained within the 2-4 percent target range since 2002.

Fiscal consolidation has reduced the overall budget deficit, with the latter declining from 8.5% of GDP in 2001 to 3.4% in 2007. The total public debt-to-GDP ratio fell from nearly 67% at end 2001 to about 53% at end 2007. Sustained economic growth, Lek appreciation, falling interest rates, and the use of privatization proceeds to retire public debt contributed to the decline in debt ratios.

Nevertheless, Albania suffers from large current account deficits. Large inflows of current transfers and positive service balances in recent years have helped dampen the rising trade deficits. Imports have steadily grown reaching 49% of GDP in 2007 with exports lagging behind at 23% of GDP leaving Albania with a trade deficit of 24%. Large remittances at around 14% of GDP have been critical in counterbalancing high trade deficits. In 2007, soaring electricity imports have led to a significant deterioration of the current account deficit.

Albania is a member of the International Development Association (IDA), International Bank for Reconstruction and Development (IBRD),World Bank,  the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). In 2008, on account of its strong achievements in economic growth, Albania has achieved middle income status and graduated from IDA concessional flows to IBRD lending, sending a positive signal to investors and the financial markets about the economic prospects of the country. Albania is well-poised to continue its strong economic performance and to advance towards its goal of European integration.