Invest in Albania

Albania has made significant progress since its transition from a communist regime towards a market-based economy. Following the pyramid crisis of 1997, it achieved and sustained strong economic growth.

Albania is a small country situated in South Eastern Europe in the West of Balkan Peninsula. It encompasses an area of 28,748 square kilometers. It is bounded to the northwest by Montenegro, to the northeast by the Kosovo region, to the east by Macedonia, and to the southeast and south by Greece. To the west and southwest lie the Adriatic and Ionian seas. Albania's western neighbor across the Adriatic, Italy, lies some 80 km across the Adriatic. From the geographical position point of view, Albania represents a strategic crossroads from the Western Mediterranean to the Balkans and Asia Minor. The capital city is Tirana. Other important cities include Durresi (Durazzo), Shkodra, Vlora, and Korca Gjirokastra.

Middle income country

Albania is a lower middle income country with a per capita GDP of $2,580 in 2005 (GNI, Atlas method). Even though agriculture has traditionally played an important role in the economy, agriculture's share of gross domestic product has

Macro economics data and statistics for Albania Starting a  Business in Albania

declined in recent years to about 23 percent in 2005. Recent growth has been driven by services and construction. Albania is also highly reliant on workers’ remittances, which make up to 14 percent of GDP. Despite recent progress, Albania faces considerable challenges. While recorded per capita income has increased steadily, Albania remains one of the poorest countries in Europe, with almost one-fifth of the population living in poverty and about three percent in extreme poverty, defined as "the inability to meet basic food requirements." After Albania joined the World Bank in 1991, the Bank became one of the country's main sources of development assistance. Albania is a member of the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). Since the inception of the World Bank’s program in Albania, 59 projects for a total amount of $855 million have been approved by the Board of Directors.

Risk factors

The macroeconomic environment has remained favorable in recent years, although high trade and fiscal deficits persist. Economic growth is stable at around 5-6% of GDP annually, driven mainly by construction, business services and transport. Official unemployment remains around 15 per cent of the labour force, but underemployment is widespread. Annual consumer price inflation is relatively subdued at 2-4 per cent. The exchange rate is stable, subject to appreciation pressures and the seasonal effect of uneven remittance transfers, with sharp peaks in summer and winter.

Economic activity

Albania has enacted significant reforms in recent years but significant challenges remain. The business environment suffers from high corruption and serious shortcomings in the judiciary. Law enforcement is sporadic and poor. Despite sizeable investments in recent years, infrastructure is woefully inadequate. A substandard road network, lack of reliable power supply, and environmental degradation hinder investors' ability to tap the Albanian market. Poverty outside the Tirana-Durazzo area is severe.

Political climate

After the conduct of recent parliamentary elections, held on 3 July 2005, The opposition Democratic Party won a plurality of seats, but not enough to form its own government. The coalition government was formed in early September, with Dr. Berisha as Prime Minister. His Democratic Party holds 10 of the 14 Ministries, with the remaining four going to each of the four smaller coalition partners. The handover of power from the socialist government to the new coalition government in early September 2005 was peaceful.

Relationship with neighbors

Albania maintains good relations with its neighbours and plays a constructive role in the region. The government has shown restraint in relation to sizeable Albanian minorities in Serbia and Montenegro and FYR Macedonia. Talks with the EU on a Stabilisation and Association Agreement (“SAA”) were initiated in 2003. The negotiations for the SAA have been concluded, and the agreed text was initialed in 2006. The text has now been proposed for signature to the European Council. Albania will continue to be required to show material progress of commitments, especially with regard to judicial reform. Albania is pursuing accession to NATO as well.

Climate

Average annual temperature is around 13-14C (55-57F). Average annual rainfall is about 1.485 mm with a stable distribution. Like other Mediterranean countries, Albania's climate is mild and consistently cool.