Kosovo and Albania lead the region - EBRD predicts economic growth of 3.9% and 3.5%, respectively
The European Bank for Reconstruction and Development (EBRD) has published projections for the economies of its member countries this year and next. As for the Western Balkans, Kosovo with 3.9% and Albania with 3.5% will have the highest growth in the region this year and in 2026.
According to the EBRD, real growth in the Western Balkans is projected to be modest, averaging 2.7% in 2025 and 3.2% in 2026. “Continued global uncertainty and weak EU demand will continue to impact exports, trade, investment and remittances, particularly in export-oriented economies such as Serbia, Bosnia and Herzegovina and North Macedonia,” the report notes. Tourism-dependent economies such as Kosovo, Albania and Montenegro are also affected by the increased uncertainty in EU economies.
"While resilient private consumption, wage growth and public investment have supported economic activity, structural reforms and progress towards EU integration could significantly boost further growth. Rising unit labour costs and inflation continue to pose significant challenges, while political instability in some economies weighs on investment and growth," the EBRD notes.
Regarding Albania, it is highlighted that economic growth moderated to 3.4% in the first quarter of 2025, driven by the services and construction sectors, while industry and agriculture experienced slight contractions.
On the expenditure side, economic activity was broadly balanced, with notable contributions from increased government consumption and exports of goods and services. The current account deficit narrowed by over 40% year-on-year in the first quarter of 2025, reflecting changes in all major components. Inflationary pressures remained low, with the annual inflation rate standing at 2.3 percent in August.
But the EBRD also lists risks related to the possibility of softening demand within the Eurozone, a decline in remittance inflows, and adverse climatic factors such as drought.
On the other hand, accelerated implementation of structural reforms and further progress in European Union integration, further supported by the implementation of the EU Growth Plan for the Western Balkans, could strengthen Albania's growth prospects.
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