"Economic growth will slow down!" - EC: The momentum of tourism is over. Exports of services and goods are expected to expand
The Albanian economy is expected to grow at a slower pace over the next two years. This is the forecast of the European Commission in terms of economic activity in Albania, where in the most recent report it states that the growth of the Gross Domestic Product is expected to be 3.6% in 2025 and 3.5% in 2026, as household consumption and public spending will decrease.
According to the European Commission, slow employment growth will weigh on private consumption, while public spending growth is forecast to slow following a significant increase in public sector wages during 2023-2024. Also, after the "boom" experienced by tourism in our country, the number of tourists will continue to decrease in the next two years.
On the other hand, exports of services and goods are seen in a more positive light, as they are expected to expand in 2025 and 2026. This positive outlook comes as a result of declining risks associated with exchange rate volatility, increased power shortages skilled workers as a result of immigration and a possible re-emergence of inflationary pressures.
In 2025, the budget deficit is expected to remain at a similar level before falling slightly to 2% of GDP in 2026. The government debt-to-GDP ratio fell below 60% in 2023, supported by a positive primary balance. The debt ratio is projected to decline in 2024-2026 at a more moderate pace, driven by nominal GDP growth.
After a sharp decline in 2024, inflation will gradually return to the Bank of Albania's 3% target in 2025. Also, the number of unemployment will decrease, while remittances, i.e. bubbles of money brought by immigrants, are expected to be stable and make a significant contribution to GDP.
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