Economy of Albania

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The Economy of Albania has undergone a transition from its communist past into an open-market economy in the last two decades. Although the country is rich in natural resources, the economy is mainly bolstered by emigrant annual remittances, services, and the agricultural sector.

Contents

History

The collapse of communism in Albania came later and was more chaotic than in other Eastern European countries and was marked by a mass exodus of refugees to Italy and Greece in 1991 and 1992. They country attempted to transition to autarky, but this eventually failed. Attempts at reform began in earnest in early 1992 after real GDP fell by more than 50% from its peak in 1989. Albania currently suffers from high organised crime and corruption rates, the highest in Europe. Reforms are taking place to fix that.[5]

The democratically elected government that assumed office in April 1992 launched an ambitious economic reform program to halt economic deterioration and put the country on the path toward a market economy. Key elements included price and exchange system liberalization, fiscal consolidation, monetary restraint, and a firm income policy. These were complemented by a comprehensive package of structural reforms including privatization, enterprise, and financial sector reform, and creation of the legal framework for a market economy and private sector activity. Most agriculture, state housing, and small industry were privatized. This trend continued with the privatization of transport, services, and small and medium-sized enterprises. In 1995, the government began privatizing large state enterprises. After reaching a low point in the early 1990s, the economy slowly expanded again, reaching its 1989 level by the end of the decade.[6]

Macro-economic trends

This is a chart of Gross Domestic Product (GDP) of Albania in national currency (million leks) and in US dollars based on Purchasing Power Parity (PPP) from estimates by the International Monetary Fund.[7]

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