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Albania: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Albania was the last central and eastern European country to adopt free-market reforms. Even though the country's economy has improved during the last few years, Albania still remains one of the poorest countries in Europe. Therefore, nearly 20% of the population still lives below the poverty threshold and more than 50% of the GDP is made up by the informal economy, a fact which has hindered the current economic reform program.
However, with its solvent and well-capitalized banking, in 2009 and 2010 Albania resisted the global crisis better than its Balkan neighbors, due to its still limited international openness and the development of global prices of raw materials. The country has escaped the recession during the years of crisis, although the fall in activity in the EU and the neighboring countries of Southeastern Europe weighed heavily on the economy. Greece is a major trading partner and investor, as well as a provider of remittances from the diaspora and its economic difficulties since 2011 have been felt strongly in Albania.
The current government is pursuing a program focused on the fight against corruption, organized crime and trafficking, and the implementing of liberal reforms designed to prepare Albania for future EU membership and able to attract foreign investors .
To the extent that Albania is a country only moderately integrated into global capital flows, the impact of the international situation has been less dramatic than in other countries of Eastern Europe. The country grew by 5% in 2011 - thanks to the good health of the construction and services sectors - and could grow by 2% in 2012. Nevertheless, the economy is burdened by a debt of more than 60% of GDP, exports at half mast and a significant drop in remittances from Albanian migrants living abroad.
The development of the country in the coming years could also be helped by the expectations of an official application for accession to the European Union.
The Albanian economy remains fragile and dependent on outside institutional assistance.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 12.17 | 11.90e | 13.29e | 14.22 | 15.11 |
| GDP (Constant Prices, Annual % Change) | 3.3 | 3.5e | 2.5 | 3.5 | 4.2 |
| GDP per Capita (USD) | 3,819e | 3,716 | 4,131 | 4,396 | 4,650 |
| General Government Gross Debt (in % of GDP) | 59.8 | 58.2 | 59.4e | 59.2 | 59.6 |
| Inflation Rate (%) | 2.2 | 3.6e | 3.9e | 3.5 | 2.9 |
| Unemployment Rate (% of the Labor Force) | 13.1 | 12.5 | 11.5 | 11.0 | 10.5 |
| Current Account (billions USD) | -1.65 | -1.40e | -1.45e | -1.39 | -1.38 |
| Current Account (in % of GDP) | -13.5 | -11.8e | -10.9 | -9.2 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
The share of agriculture in the GDP is about 21%. The sector employs almost 50% of the active population. Agricultural production is concentrated on wheat, corn, oats, sorghum, cotton, potatoes, vegetables, the olive, tobacco, fruits, beet sugar, vines, livestock farming and dairy products. Agriculture suffers from the lack of modern equipment, ownership and land parceling problems, all of which lead to a relatively low productivity. It has to be noted that agricultural production is higher than its share in the GDP. As a matter of fact, a large part of the produce is consumed by the farmers themselves and, therefore, it is not sold.
In 2012, the industrial sector accounts for about 10,1% of the country's GDP and employs 12% of the active population. The sector is concentrated on food processing, textiles and clothing, timber work(construction), oil, cement, chemical products, mining, transport and hydraulic energy.
The services sector represents close to 68% of the GDP and employs a fourth of the active population. Tourism, telephony, the banking and insurance sectors are in full expansion.
During the last past years, the share of income from the agricultural and industrial sectors has been falling progressively. In parallel, the part of the services sector is increasing each year and the sector has been a key driver of the Albanian economy (tourism, telephony, banking and insurance).
The sectors of telecommunications, energy, minerals and medical equipment are expected to develop in the following years and they offer good opportunities.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 58.0 | 13.5 | 28.4 |
| Value Added (in % of GDP) | 20.5 | 19.6 | 59.9 |
| Value Added (Annual % Change) | 2.6 | 7.0 | 7.0 |
Source: World Bank - Last Available Data.
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| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Albanian Lek (ALL) - Average Annual Exchange Rate For 1 USD | 98.10 | 90.43 | 83.89 | 94.98 | 103.94 |
Source: World Bank - Last Available Data.
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Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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Albania is focused on imports. In these recent years, imports have registered a growth of more than 25%. The main import goods are high value-added products such as machinery and equipment, metals, vehicles and means of transport. Albania's main suppliers are Italy (26%), Greece (15%) and Turkey (6%).
The country mainly exports mineral ores (15% of the total exports), as well as textile products and shoes, metal, crude oil, vegetables, fruits and tobacco. Albania's main customers are Italy (57%), Greece (12%) and Kosovo (4%).
In 2011, the European Union was Albania's main trading partner, representing 64% of Albanian imports and 70% of Albanian exports.
The country has a structural trade deficit. The increase in imports is due to the rise of international prices in certain goods and electricity. Additionally, exports are neither sufficiently diversified nor competitive in terms of prices. Furthermore, the economic crisis has had an impact on exports, which experienced a sharp drop after 2008 since Albania's commercial partners, also affected by the crisis, have reduced their demand for Albanian products.
At short term, the worsening position of Albania's key trading partners (Italy and Greecy) should have a negative impact on the country's trade balance.
| Foreign Trade Indicators | 2007 | 2008 | 2009 | 2010 | 2011 |
| Imports of Goods (million USD) | 4,188 | 5,251 | 4,550 | 4,601 | 5,379 |
| Exports of Goods (million USD) | 1,078 | 1,355 | 1,091 | 1,550 | 1,956 |
| Imports of Services (million USD) | 1,893 | 2,361 | 2,215 | 1,992 | 2,331 |
| Exports of Services (million USD) | 1,924 | 2,420 | 2,348 | 2,192 | 2,366 |
| Imports of Goods and Services (Annual % Change) | 28.2 | 21.1 | -12.0 | -9.1 | - |
| Exports of Goods and Services (Annual % Change) | 7.7 | 7.1 | 5.9 | 4.2 | - |
| Imports of Goods and Services (in % of GDP) | 55.0 | 56.1 | 54.2 | 51.4 | - |
| Exports of Goods and Services (in % of GDP) | 28.8 | 29.5 | 28.6 | 29.7 | - |
| Trade Balance (million USD) | -2,900 | -3,552 | -3,216 | -2,757 | - |
| Trade Balance (Including Service) (million USD) | -2,880 | -3,454 | - | - | - |
| Foreign Trade (in % of GDP) | 83.7 | 85.6 | 82.8 | 81.1 | - |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| Italy | 50.8% |
| Serbia | 8.3% |
| Turkey | 6.0% |
| China | 5.5% |
| Greece | 5.4% |
| See More Countries | 24.0% |
| Main Suppliers (% of Imports) |
2010 |
| Italy | 28.2% |
| Greece | 13.1% |
| China | 6.3% |
| Turkey | 5.7% |
| Germany | 5.6% |
| See More Countries | 41.1% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
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Source: Worldwide Press Freedom Index 2011, Reporters Without Borders
Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Map of freedom 2010
Source: Freedom House
Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Last Updates: May 2012