The Albanian economy is growing above the average of the past decade, but the growth momentum has been concentrated only in two sectors of the economy last year, construction and services (tourism).
Analyzing the components of economic growth, the Ministry of Finance expects that GDP for 2023 will increase by 3.5 percent (9-month = 3.25%), but the contributors to this growth will be construction by 0.7 percentage points and services by 2.6 percentage points, while the contribution of other sectors, agriculture, and industry will be zero.
The concentration of economic growth reduces the distribution of benefits among the wider population and those in need. The structure of economic growth shows that families whose incomes are linked to agriculture and industry, on the contrary, will experience deterioration, as both these sectors contribute to 60% of employment in the country.
The increase in the minimum wage four times between January 2022 and April 2023, the strengthening of the lek, and the decrease in demand from abroad have posed difficulties for the Albanian industry. This month, thousands of people became unemployed, as factories could not renegotiate price increases with European clients. The garment industry is the hardest hit, primarily the production lines in districts.
Agriculture has also slowed down growth rates sustainably, but in the last two years, the largest sector of the economy has entered a downward trend.
Official data from the Institute of Statistics (INSTAT) showed that in the third quarter of 2023, production in the agricultural sector declined by 0.4%, the largest decline since the fourth quarter of 2021 when bad weather damaged the harvest. Also, in 2022 agriculture remained in number one place, while the country’s economy grew by 4.86%.
In the New Macroeconomic Framework, the Ministry of Finance predicts that during the period 2025-2027 from the perspective of aggregate supply, all major sectors are expected to continue to grow more or less at the same trend as their historical average.
Specifically, agriculture is expected to grow by an average of about 2.4 percent annually in real terms during the period 2025–2027, with an average annual contribution to economic growth of around 0.4 percentage points, although the sector has been in number one place for the last three years. Industry is expected to grow by an annual average of about 4.7 percent and an average annual contribution of about 0.5 percentage points. Even this forecast for the industry is optimistic, as the largest operators within the sector do not expect a good year for this year either.
Construction is expected to grow by an average annual rate of about 2.6 percent and an average annual contribution of about 0.3 percentage points, while services will see an average annual growth rate of about 4.5 percent and an average annual contribution of about 2.2 percentage points.
