Albania - Market OverviewAlbania - Market Overview
Albania is an upper middle-income country with a GDP per capita of USD 5,288 (2018 est.) and a population of approximately 2.9 million people, around 55% of whom live in urban areas (2011 Census). Real GDP grew by 4.2 % in 2018, driven chiefly by construction, exports, household consumption, and foreign direct investment in energy projects. The IMF has projected that Albania’s economic growth will slow to 3.6% in 2019.
Albania received EU candidate status in June 2014 and is working to implement the reforms necessary to open EU accession negotiations. Albania joined the World Trade Organization (WTO) in 2000 and the North Atlantic Treaty Organization (NATO) in 2009.
Exports of merchandise totaled USD 2.88 billion in 2018, 1.7% of which were destined for the United States. Albania imported USD 5.94 billion of goods in 2018, 1.4% of which originated in the United States. Primary exports from the United States to Albania include vehicles and spare parts, meat, and telecommunications equipment. Primary exports from Albania to the United States include ferro-alloys, medicinal and aromatic herbs, and footwear. Two-way trade in goods between Albania and the United States totaled USD 135 million in 2018. The EU remains Albania’s primary trading partner. In 2018, the EU provided 61% of Albania’s imports and received 76% of its exports. Albania’s primary trading partners are Italy, Germany, China, Greece, and Turkey.
Albania enjoys important trade benefits with EU members since it signed and ratified the Stabilization and Association Agreement (SAA) in 2006. Albania has a free trade agreement (FTA) with Turkey and is a signatory to the Central European Free Trade Agreement (CEFTA), which includes North Macedonia, Montenegro, Kosovo, Moldova, Bosnia and Herzegovina, and Serbia. In June 2009, Albania also signed an FTA with the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland.
Corruption is widespread in Albania, particularly in the judiciary, and respect for sanctity of contract remains low. Reform of the judicial system is underway, but the investment climate remains problematic and Albania is perceived by many investors as a difficult place to do business.
Property rights are another challenge in Albania, as clear title is difficult to obtain. Unscrupulous actors frequently manipulate the corrupt court system to obtain title to land that is not their own. Compensation for land confiscated by the former communist regime is difficult to obtain and inadequate. Meanwhile, the agency charged with removing illegally constructed buildings often acts without consultation and fails to follow procedures.
To attract FDI, the GOA approved a Law on Strategic Investments in 2015. The law outlines investment incentives and offers fast-track administrative procedures to strategic foreign and domestic investors, depending on the sector, size of the investment, and number of jobs created.
Albania ranked 63rd out of 190 countries in the World Bank’s 2019 Doing Business report, an improvement of two places from 2018. Despite improvements, Albania continues to score poorly in the areas of issuing construction permits (151), obtaining electricity (140), paying taxes (122), enforcing contracts (98), and registering property (98).
The Albanian legal system ostensibly does not discriminate against foreign investors. The U.S.-Albanian Bilateral Investment Treaty entered into force in 1998 and ensures that U.S. investors receive most-favored-nation treatment. The Law on Foreign Investment outlines specific protections for foreign investors and allows 100% foreign ownership of companies except of domestic and international air passenger transport and television broadcasting.
Albania offers good prospects for exports across all sectors, particularly in energy, oil and gas, tourism, healthcare, mining, infrastructure, construction, and information and communication technology (ICT).