Albania - Market OverviewAlbania - Market Overview
Albania is an upper middle-income country with a GNI per capita of USD 4,300 (2015) and a population of approximately 2.9 million people, more than half of who live in urban areas. Real GDP grew by 3.46 percent in 2016, and growth is projected to reach 3.8 percent in 2017, supported chiefly by higher private investments and consumption. Albania received EU candidate status in June 2014 and is working to implement reforms necessary to open EU accession negotiations. Albania joined the World Trade Organization (WTO) in 2000 and the North Atlantic Treaty Organization (NATO) in 2009.
Exports of merchandise totaled USD 2 billion in 2016, 6.2 percent of which were destined for the United States. Albania imported USD 4.67 billion of goods and services in 2016, one percent of which originated in the United States. Primary exports from the United States to Albania include vehicles, meat, heavy machinery, and chemicals. Primary exports from Albania to the United States include mineral fuel and oil, medicinal and aromatic herbs, ferro-alloys, and textiles. Two-way trade in goods between Albania and the United States totaled USD 174 million in 2016. The EU remains Albania’s primary trading partner. In 2016, the EU provided 67.5 percent of the country’s imports and received 80 percent of exports. Albania’s primary trading partners are Italy, China, Germany, Greece, and Turkey.
Albania has a free trade agreement (FTA) with Turkey and is signatory to the Central European Free Trade Agreement (CEFTA), which includes Macedonia, Montenegro, Kosovo, Moldova, Serbia, and Bosnia and Herzegovina. Albania also enjoys important trade benefits with EU members since it signed and ratified the Stabilization and Association Agreement (SAA) in 2006. In June 2009, Albania also signed an FTA with the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland.
Corruption is widespread in Albania, particularly in the judiciary, and respect for sanctity of contract remains low. Reform of the judicial system is underway, but the investment climate remains problematic and Albania is perceived by many investors as a difficult place to do business.
Property rights are another challenge in Albania, as clear title is difficult to obtain. Unscrupulous actors frequently manipulate the corrupt court system to obtain title to land that is not their own. Compensation for land confiscated by the former communist regime is difficult to obtain and inadequate. Meanwhile, the agency charged with removing illegally constructed buildings often acts without consultation and fails to follow procedures.
To attract FDI, the GOA approved a new Law on Strategic Investments in 2015. The law outlines investment incentives and offers fast-track administrative procedures to strategic foreign and domestic investors, depending on the sector, size of the investment, and number of jobs created.
Albania climbed 36 notches in the World Bank’s 2017 Doing Business report, ranking 58th out of 190 countries, up from 90th in 2016. The lifting of a moratorium on building permits, which the government froze in 2013 to combat illegal construction, explained much of the improvement. Albania also continued to score poorly for enforcing contracts and registering property, ranking 116th and 106th, in the overall global rankings.
The Albanian legal system ostensibly does not discriminate against foreign investors. The U.S.-Albanian bilateral investment treaty entered into force in 1998 and ensures that U.S. investors receive most-favored-nation treatment. The Law on Foreign Investment outlines specific protections for foreign investors and allows 100 percent foreign ownership of companies except in the areas of international air passenger transport, electric power transmission, and television broadcasting.
Energy and power, oil and gas, mining, road and rail, water supply and sewerage, healthcare, and information and communication technology (ICT) represent the best prospects for export promotion in Albania in the coming years.
Albania Trade Development and Promotion