Albania’s growth indicates signs of recovery since the global economic crisis. The country’s growth suffered from the Eurozone crisis, in particular in neighboring Italy and Greece. Exports, remittances, and to some extent foreign direct investment (FDI) fell and were the main channels of the external shocks on the economy. Growth reached its lowest rate of 1.4 percent in 2013, as consumption shrank, investments stagnated, and fiscal and financial vulnerabilities came to the fore. Thanks to an increase in domestic demand supported by sound fiscal policies and structural reforms, growth is estimated to have picked up to 2.1 percent in 2014, due also to an increase in consumption and private investments. Growth is expected to increase gradually over the medium term but will remain significantly below its precrisis levels and its potential. Growth is projected to rise to 3 percent in 2015 and 3.5 percent in 2016 supported by an increase in FDI. Domestic private investment is also expected to gradually pick up in response to an arrears clearance and credit expansion, as well as sustained improvements in the business climate.
Large external imbalances gradually corrected, but external vulnerabilities remain. The current account deficit (CAD) declined from 15.9 percent of GDP in 2009 to 10.6 percent in 2013, as exports grew from 28.4 percent of GDP in 2009 to 35.0 percent in 2013 and imports changed little as a share of output. The downward trend in the CAD is expected to have reversed in 2014 and reached 14 percent of GDP. Despite this expansion, financing has been available through debt and equity in the financial account.
External debt has increased since 2009 but remained at a manageable 36.7 percent of GDP in 2014.