Albania » Outlook

Although behind its Balkan neighbors, Albania is making the transition from a centrally planned economy to a market-oriented system. It is a difficult and challenging transition.

To put the country on the right path and save its deteriorating economy the government has launched an extensive economic reform program. Reducing the large gray economy and attracting foreign investment are on the agenda of the fiscal reform package. Corruption, which is always an issue in poor countries such as Albania, is another challenge the government faces and it is trying hard to curb violent crimes The annual remittances from abroad of $600-$800 million, which mostly comes from Albanians residing in Greece and Italy help to make up for the county’s trade deficit. The agriculture sector makes up more than one-fifth of GDP, it is however not being used utilized to the maximum because of lack of modern equipment and unclear property rights. Energy crises and inadequate infrastructure do not provide a conducive business environment making it difficult to attract and sustain foreign investment. Thermal power plant near Vlore and improved transmission line between Albania and Montenegro will help relieve the energy shortages.

Things seem to be progressing with time, as the government is trying to improve the national road and rail network,which has been a long-standing barrier to sustained economic growth. The positive aspect is that the macroeconomic growth was strong in 2003-07 and inflation has been low and stable. The country has made great progress in terms of keeping a stable democratic environment as well as other developments. Things are changing in Albania for the better and therefore the expectations are also high from a country which is fast emerging from the shadows of the past.