Albania Economic Structure
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Albania’s GDP dropped to 2 percent in 2009, from 6 percent between 2004-08.
In 2010 GDP growth is still declining at 2.6 percent.
Albania has a structural problem with its economy. Although it is rich in natural deposits, stagnation, crime and corruption mean that badly needed foreign investment is not flowing into the country.
Without that investment, resources cannot be exploited and Albania will remain one of the poorest countries in Europe. It is quite possibly Europe’s only third world country.
Albania’s GDP dropped to 2 percent in 2009, from 6 percent between 2004-08.
In 2010 GDP growth is still declining at 2.6 percent.
Albania has a structural problem with its economy. Although it is rich in natural deposits, stagnation, crime and corruption mean that badly needed foreign investment is not flowing into the country.
Without that investment, resources cannot be exploited and Albania will remain one of the poorest countries in Europe. It is quite possibly Europe’s only third world country.
Table of Contents
Economic Geography
Albania is situated in Southeastern Europe, bordering the Adriatic Sea and Ionian Sea, between Greece in the south and Montenegro and Kosovo to the north, strategically located along Strait of Otranto linking the Adriatic Sea to Ionian Sea and Mediterranean Sea. The terrain is mostly mountains and hills; small plains along coast with a mild temperate climate.
However, Albania is also prone to destructive earthquakes, tsunamis along southwestern coast, floods and drought.
Combined with a high crime rate, Albania doesn’t pose a desirable tourism destination, which is a robust source of wealth for its neighbours such as Croatia.
Population and Labor Force
Albania’s population as of 2010 was 3.202 million, growing rapidly, with 23.1 percent aged 0-14 years. 67.1 percent aged 15-64 and 9.8 percent aged 65 and over with 12.5 percent of the population unemployed.
58 percent of employment in Albania is generated through agriculture, although agricultural only contributes 20.6 percent of GDP – 15 percent of labor is contributed by industries and 27 percent in services.
This profile of a young rapidly growing country that is mainly either agricultural or unemployed is more reminiscent of the Middle East and Africa than it is of Europe.
Industry Sectors
Albania’s agriculture contributed 20.6 percent to the country’s GDP in 2010, services accounted for 60.6 percent and industries a mere 18.8 percent. Albania has rich deposits of fossil fuels and precious metals that can turn its trade deficit around however, the country’s industry sector suffers from the unavailability of modern machinery.
2010 estimates expect Albania’s industrial production growth rate to decline by 4 percent however recent imports and investment in modern machinery is expected to help the economy grow. Its current and main industry sectors are:
• food processing
• textiles and clothing
• lumber, oil, mining, basic metals, hydropower
• cement and chemicals
However, the economy is challenged by the unavailability of modern machines, which could increase productivity significantly. Hence Albania is increasing its machinery imports.
The IMF plays an important role in the economic as well as political structure of the country. According to a memorandum signed in 2003, the IMF will assist the country in overhauling its entire structure to become more productive and overcome the trade deficit that hampers the country’s growth.
Since 2003, the effects of all these efforts have become noticeable. Albania has been able to decrease its trade deficit in 2010, with exports increasing to $1.194 billion from $1.345 billion in 2008 – and imports decreasing to $3.602 billion in 2010 from $4.898 billion in 2008.
