Governor Gent Sejko stated Wednesday that Albania’s economic and financial developments have remained positive during the first half of 2025.

Economic activity expanded steadily, with GDP growing by 3.4% in the first quarter, while consumer price inflation stabilized at low levels. Financial markets have been calm, and financing conditions remain accommodative.

Sejko noted that growth was broadly based, supported by increases in consumption, investment, and foreign demand. This stimulated activity in construction and services sectors, although industry and agriculture showed contraction trends.

Labor market conditions improved, with non-agricultural employment rising, unemployment falling to 8.7%, and wages increasing by 9.6% in Q1. These developments reflect rising household incomes but also pose potential cost and inflationary pressures going forward.

Inflation averaged 2.3% in April-May, influenced by higher food and rent prices and less negative oil price inflation. Despite short-term fluctuations, inflation remains below target due to weak external pressures, currency appreciation, and supply-side factors.

The monetary policy stance was eased in response to these developments, aiming to support price stability and economic growth. Bank lending remains robust, with private sector credit growing 16.2% in the first five months of 2025, and credit quality remaining sound.

Looking ahead, Sejko said economic growth is expected to continue near potential, supported by domestic demand, stable labor markets, positive confidence, and accommodative financing conditions. Inflation is forecast to return to the 3% target by early 2026.

Risks to inflation remain balanced, with geopolitical tensions and trade conflicts posing upside risks, while slower Eurozone growth and lower inflation abroad offer downside risks.

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“Our baseline scenario projections remain positive. According to this scenario, the economy is projected to record a fast growth over the course of 2021, and continue to grow at a slower, but stable pace, in the coming years,” Sejko said in his remarks at a press conference after a meeting of the central bank’s Supervisory Council earlier today.

Sejko noted that “economic activity in Albania is recovering.

“This growth will reflect improved economic confidence and balance sheets of private financial sector, increased foreign demand and a favourable financial environment,” he added.

The central bank governor underlined that expansion of demand for goods and services will drive employment rate growth, wages and profit margins, in line with bank’s inflation target.

Referring to official statistics, Sejko said that according to data from the National Institute of Statistics (INSTAT), the Albanian economy grew by 17.9% in the second quarter of 2021, whereas the available indirect data signal a further expansion of economy in the third quarter of the year.

“The central bank’s continued accommodative monetary policy has continued to be translated into low financing costs and favourable lending conditions. Financial markets are calm and characterised by normal trading volumes, contained risk premiums and low interest rates. In addition, the lek exchange rate is stable, by recording contained fluctuations, in line with typical seasonal factors,” Sejko said.

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According to BoA report on monetary policy, in the third quarter the economic activity was almost 10% higher than in the second quarter, although it remained 3.5% lower than the same period last year.

The Albanian economy added about 34,000 jobs during the third quarter, recovering about 2/3 of the losses recorded in the previous quarter.

At the same time, exports of Albanian goods have increased, credit to the private sector increased by 7.7% at the end of December, while the financial position of businesses improved. //a.i/