In its latest Western Balkans Regular Economic Report, the World Bank said economies across the region had proved resilient to external shocks and continued to converge towards the European Union.

Albania’s economic resilience has been bolstered by improvements in public finances and external balances, with public debt falling below 50% of gross domestic product (GDP), the report said.

Economic activity remained steady in the early months of 2026, supported by domestic demand, services and construction. A tight labour market helped push unemployment to a record low, while wages continued to rise and poverty declined further.

Credit growth remained strong and the financial sector resilient, underpinned in part by low levels of non-performing loans.

Inflation rose gradually through August, driven by higher food and fuel prices, rising rents amid strong tourism demand and continued wage growth.

A budget surplus and the appreciation of the lek also helped reduce public debt, while higher foreign direct investment, increased foreign exchange reserves and a narrower current account deficit strengthened the country’s external position.

The World Bank said these developments pointed to improving macroeconomic stability, although structural challenges continued to pose risks to growth over the medium term.

Economic growth across the six Western Balkan economies – Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia – is forecast to accelerate to 3.1% in 2026 from 2.6% in 2025, before rising to 3.4% in 2027 and remaining at that level in 2028.

“At a time of heightened geopolitical uncertainty and sluggish growth among our main trading partners, the Western Balkans has once again demonstrated economic resilience,” said Xiaoqing Yu, the World Bank’s director for the Western Balkans.

But resilience alone would not be enough to bring regional incomes closer to EU levels or generate the quality jobs needed, she said.

The next phase of growth would require a more dynamic private sector, more predictable regulations and the removal of trade barriers, including those arising from domestic rules and administrative procedures, Yu added.

Successive rounds of tariff liberalisation have made the Western Balkans highly integrated into global trade. Trade in goods and services reached 107% of regional GDP in 2025, above the EU average of 90%, while services exports quadrupled between 2010 and 2025.

Further reforms are needed to help businesses benefit more fully from access to international markets by reducing unnecessary regulatory and administrative costs, the report said.

Average tariffs on imported goods in the region are about 6%, while non-tariff measures add costs equivalent to around 10% of imports. In some agri-food sectors, those costs exceed 20%.

Restrictions on cross-border trade in services are even more burdensome, with their cost estimated at 29%, the report said.

Simulations cited by the World Bank suggest that removing half of existing import barriers — including licensing and authorisation requirements, repeated inspections, certification procedures and rules requiring businesses to maintain a physical presence in domestic markets — could increase GDP by up to 12.5% over the medium term.

High import costs also make it harder for regional firms to export and maintain a foothold in foreign markets.

Only about one-third of new export relationships established by Western Balkan companies survive beyond their first year, while just 1% to 4% remain active after five years, according to the report.

The figures have implications for employment, as exporting firms account for the vast majority of manufacturing jobs in the region. Exporters also tend to be larger and pay higher wages than comparable businesses serving only domestic markets.

The World Bank said reforms should focus on improving the quality of regulation rather than simply reducing the number of rules.

/m.m/u.sh/

Minister of Tourism, Culture, and Sports Blendi Gonxhja announced today that the government has approved the decision regarding the grant agreement with the World Bank. The key innovation is a joint plan linking tourist destinations with their specific needs regarding infrastructure, services, professional skills and management.

According to Gonxhja, this new approach aims to ensure that future investments complement one another and generate benefits for a larger number of communities.

“The initiative aims to better connect the coast with inland areas. There will be explored the opportunities to link the most popular destinations with other natural and cultural attractions, encouraging visitors to explore more of Albania. Also, tourism beyond the summer season is being encouraged, along with opportunities for an even more diverse offering that attracts visitors throughout the year and creates prospects for more sustainable economic activity, thereby increasing benefits for the local economy,” emphasized Gonxhja.

The minister stated that, “Attention will focus on the quality of tourism product and services, with the aim of generating higher revenues and creating higher-quality employment.”

Regarding the use of funds, Gonxhja noted that, “This grant will finance the drafting of the tourism plan, the identification of priority interventions and studies to assess their feasibility, costs and impacts on the environment and local residents.” It will also cover the preparation of the documentation and institutional capacities required for the project’s design and its subsequent implementation.”

The activities are set to be implemented through the Albanian Development Fund, based on an implementation agreement with the Ministry of Tourism, Culture and Sports.

“In line with our 2024–2030 national tourism strategy and together with our World Bank partners, we are targeting investments that improve tourist destinations, generate prosperity for communities and preserve and promote Albania’s natural and cultural assets,” said Gonxhja. /p.s./

The findings are part of the World Bank’s FY 2026 Albania Country Opinion Survey Report, based on responses from 219 representatives of public institutions, businesses and civil society.

Alongside tourism, agriculture and agro-processing, information technology and digital services, renewable energy, green infrastructure, construction and light manufacturing were identified as sectors with significant potential to drive employment and economic development.

In tourism, the development of agritourism, cultural and historical tourism, and adventure tourism could help extend the season and create more jobs across the country, the report said.

Agriculture and agro-processing also offer opportunities to expand value-added activities, processing, exports, storage and packaging, creating new prospects for employment and economic development outside major urban centres.

Information technology and digital services were likewise identified as promising areas for skilled employment and export-oriented growth.

Agriculture and food security ranked highest among development priorities, selected by 49% of respondents, followed by education at 47%. Healthcare was selected by 36%, jobs by 34%, and digital infrastructure by 32%.

The findings highlight the potential for Albania’s economy to generate more employment through the development of higher-value sectors, investment, digitalisation and diversification of tourism.

The World Bank has made job creation, strengthening human capital and sustainable growth key priorities in its strategy for supporting Albania.

/e.xh/a.f/u.sh/

Speaking in response to criticism from opposition Democratic Party lawmaker Enno Bozdo, Ibrahimaj said economic indicators showed an improvement in living standards and economic conditions compared with previous years, while acknowledging that further progress was needed.

Bozdo argued that Albania’s annual per capita income remained around 10,000 euros and raised concerns about structural reforms, pensions and the coverage of social assistance programmes.

Ibrahimaj said comparisons with European Union averages showed that Albania still had ground to cover, but added that the country’s economic trajectory should also be assessed in terms of progress over time.

She pointed to Albania’s gradual convergence with European economies and highlighted the European Union’s Growth Plan for candidate countries, under which funding is linked to the implementation of reform measures.

Addressing pensions, Ibrahimaj rejected suggestions that annual indexation was not being applied, saying pension adjustments are based on inflation calculations prepared by the national statistics office, INSTAT, and implemented by the Social Insurance Institute.

The Minister said the government wanted to increase wages and pensions further but stressed that such increases should be supported by productivity growth rather than higher public borrowing.

Ibrahimaj also said official data and international assessments pointed to declining poverty levels, an increase in contributors to the pension system and an improvement in economic conditions compared with 2013.

/a.f/u.sh/

The Delegation of the European Union in Tirana announced Wednesday that European Commission has made available €49 million to Albania, €44.2 million to Montenegro, and €65.7 million to North Macedonia under the Reform and Growth Facility.

“This follows the third request for payment and the Commission’s positive assessment of reform steps implemented in the areas of business competitiveness and innovation in Albania and Montenegro, and education and digitalisation in North Macedonia,” the Delegation said.

The EU Delegation also said “with today’s release, the total amount released under the Facility under their respective envelopes reaches €212.8 million for Albania, €89.3 million for Montenegro, and €142.1 million for North Macedonia.”

In Albania, the reforms assessed by the Commission include measures to improve the business environment, facilitate investment and innovation, and expand access to finance, including for start-ups and companies active in the green and digital sectors. Of the €49 million disbursed, €22.8 million will be transferred to the state budget, while the remaining funds are made available for investment projects through the Western Balkans Investment Framework (WBIF), subject to the applicable approval procedures.

In Montenegro, the Commission assessed reforms in the area of research and innovation, including support for scientists, businesses and research institutions, as well as further strengthening of the national innovation ecosystem. Of the €44.2 million disbursed, €20.6 million will be transferred to the state budget, while the remaining funds are made available for investment projects through the WBIF.

In North Macedonia, the reforms assessed include measures to improve the financing of primary and secondary education and measures in order to expand access to digital infrastructure and IT equipment in schools. Of the €65.7 million disbursed, €30.6 million will be transferred to the state budget, while the remaining funds are made available for investment projects through the WBIF.

The funds that are earmarked for the WBIF will, once approved by the WBIF board, support infrastructure projects in sustainable transport, clean energy, digital and human capital development. Projects will be implemented in close cooperation with Western Balkan partners and international financial institutions.

The Growth Plan for the Western Balkans, adopted in 2023, aims to bring partner countries from the region benefits of membership ahead of their accession to the EU. It seeks to integrate partners into the EU’s Single Market, advance regional economic cooperation, deepen EU-related reforms and increase pre-accession funding. This in turn accelerates the enlargement process and the growth of partners’ economies.

The Plan is supported by the Reform and Growth Facility, its financial instrument with an envelope of €6 billion. Every six months, partners report on their progress on reforms implemented with the support of the Facility. The latest financial release relates to the third half-yearly reporting period, covering reforms implemented until the end of December 2025. The overall financing released under this instrument since 2024 amounts to €673.6 million.

The Western Balkans Investment Framework (WBIF) is instrumental in implementing the Reform and Growth Facility. It is channelling €3 billion in grants and loans under the Facility to support priority investments in transport, energy, digital and human capital. Established 15 years ago, the WBIF is a joint financial platform, bringing together the European Commission, financial organisations, EU Member States and Norway. It contributes directly to the EU’s Global Gateway Strategy.

/m.q/a.f/r.e/u.sh/

Sejko emphasized that, “The Albanian economy and financial stability indicators are on a positive development trend,” while the WB representative Massimiliano Paolucci praised “The significant reduction in non-performing loans and the improvement of the financial framework in the country.”

Following the meeting, Governor Sejko expressed appreciation for the technical assistance provided by the World Bank and IFC over the years, especially in the areas of banking supervision, financial education and payment systems, emphasizing the importance of continuing reforms in the financial sector.

He underlined that despite the uncertainties in the global economy, the monetary policy decisions will remain oriented towards the objective of price stability, while the possible impacts from the increase in energy and oil prices are expected to be temporary.

For his part, Paolucci, praised the policies pursued by the Bank of Albania, highlighting the progress in reducing non-performing loans from the high levels of a decade ago to around 3.8% currently, as well as developments in the modernization of payment systems.

Meeting discussions also covered Albania’s SEPA integration, the rollout of real-time instant payments, and new initiatives in digital finance, Open Banking, and data infrastructure.

The parties agreed to continue collaborating and providing technical assistance to further strengthen Albania’s financial regulatory and supervisory framework. /e.xh/a.f/p.s./

The bank said conflict in the Middle East, higher energy prices and trade disruptions could slow growth, underscoring the need for structural reforms.

“Albania’s economy continues to show resilience, but sustaining this momentum requires bold structural reforms,” said Massimiliano Paolucci, the bank’s country manager, at the presentation of its Western Balkans Regular Economic Report.

Growth is projected to edge up to 3.7% in 2027, the bank said.

The report noted declining unemployment and public debt, alongside low inflation, while highlighting labour shortages and high emigration as key challenges.

Economic expansion has been supported by services and construction, particularly tourism, while the current account balance has improved on the back of strong service exports, it added.

However, regional growth in the Western Balkans is expected to remain subdued due to spillover effects from Middle East tensions, inflation and rising uncertainty.

/r.e/a.f/u.sh/

Speaking at the Delphi Economic Forum, Hoxha took part in a panel titled “From ‘Soft Power’ to ‘Hard Reality’: The Great European Re-balancing,” which examined the shifting dynamics shaping the continent.

He said that as Europe adapts to an increasingly unpredictable global environment, it must preserve its defining values and openness while reinforcing its capacity to protect its interests on the world stage.

“This means a more strategic, resilient and capable Europe – one that combines its unique and fundamental values with the ability to implement and defend them,” Hoxha said.

Hoxha reiterated Albania’s commitment to European integration, saying the country has made a clear choice “to be part of Europe, to embrace its values and to contribute as an integral part of shared European interests.”

“We remain fully committed, now and in the future, to doing everything in our power to contribute to a stronger, more united and more effective Europe,” he added.

/m.m/j.p/u.sh/

During the meeting, Minister Malaj highlighted the World Bank’s sustained support as a critical driver of the country’s economic reforms.

Malaj emphasized that this cooperation is essential for ensuring fiscal stability and implementing tangible, high-impact development projects.

The minister expressed the commitment to deepening this cooperation to build a more competitive economy and accelerate EU alignment.

Reaffirming this partnership, Bassani said the World Bank has pledged to drive Albania’s structural reforms and sustainable economic growth

The meeting took place within the framework of high-level discussions on economic and financial cooperation. /k.s/ /a.g/p.s./

According to him, this is reflected in the maintenance of economic growth and stability of the financial sector, while the country is expected to continue a positive development trajectory in the medium and long term.

Malaj assessed that prudent economic policies and improved fiscal management have contributed to the strengthening of public finances and the economic sustainability of the country.

He also emphasized the significance of cooperation with international institutions, such as the World Bank, to advance reforms and improve the well-being of citizens.

“Cooperation with international institutions such as the World Bank remains essential for advancing reforms,” said Malaj. /e.xh/j.p/p.s./