May 21, 2022
According to the latest Western Balkans Regular Economic Report, Albania experienced a robust recovery in 2021 as a result of policy stimulus and a resurgence in travel, construction, and extractive activity. Real GDP increased by 8.5 percent, fully recovering from the pandemic-caused recession. Despite broad-based growth in 2021, public debt remains high.
Credit to the private sector expanded rapidly in 2021, benefiting both businesses and households. Similarly, bank deposits increased by 10.3 percent, with household savings accounting for roughly two-thirds of total deposit growth in the banking system. Due to investments in extractives, banking, and telecommunications, direct foreign investment increased in 2021, reaching 6.4 percent of GDP.
Despite a strong post-pandemic recovery, Albania has been impacted by global developments and faces new challenges that threaten economic and poverty prospects in 2022. Uncertainty about the Ukraine conflict is affecting price stability and growth, which is expected to slow to 3.2 percent in 2022. Private consumption is expected to re-emerge as the primary driver of GDP growth. If business climate reforms are implemented, private investment could provide additional support for growth.
Source: The World Bank
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