S&P Global Ratings has affirmed Albania’s long-term credit rating at ‘BB’ and short-term rating at ‘B’, maintaining the “stable” outlook. The agency highlighted Albania’s moderate growth expectations, fiscal discipline, and large foreign exchange reserve buffers, which provide significant protection against external shocks.
Growth Outlook for 2025 and Beyond
S&P forecasts real GDP growth of 3.4% in 2025 for Albania, driven by solid household spending, a tight labor market, and rising real wages. Tourism remains a key growth pillar, although its contribution may decline as the sector matures.
Looking ahead to 2026–2028, S&P expects annual GDP growth to average 3.4%, but warns of downside risks stemming from Albania’s dependence on tourism and potential weaker demand from major EU partners such as Germany.
EU Accession and Strategic Investments
Albania’s EU accession process has accelerated in recent months, with 24 out of 33 negotiation chapters opened. The European Commission approved €920 million for strategic projects, including the Durrës–Rrogozhinë railway, as part of the €6 billion Western Balkans growth plan.
Demographic Challenges
S&P flagged demographic pressures as a major challenge. The 2023 census revealed a 14% population decline since 2011 and showed that 15% of the population migrated abroad over the past decade. Albania’s fertility rate of 1.21 births per woman is among the lowest globally, indicating a rapidly contracting working-age population.
Public Finances and Budget Balance
During the first seven months of 2025, Albania posted a fiscal surplus of 32.6 billion Albanian lek (€330 million), or 1.2% of GDP, though this represented a 41% year-on-year decrease as spending outpaced revenue growth.
The 2025 budget allows for a fiscal deficit of 2.6% of GDP, up from 0.7% in 2024, but S&P expects the actual deficit to come in lower at around 2.3%, citing the government’s cautious spending and capital investment plans. By 2028, general government deficits are projected to remain around 2% of GDP, with net debt stable at about 47% of GDP.
Inflation and Monetary Policy
Headline inflation rose from 2.0% to 2.5% in July 2025 due to higher food and housing costs, while core inflation climbed to 2.9%. S&P projects inflation to average 2.4% in 2025, peaking in the first half of 2026. The Bank of Albania is expected to keep interest rates unchanged in the near term.
Foreign Exchange Reserves and Rating Outlook
Albania’s foreign exchange reserves increased 27% to $7.84 billion as of July 2025, supported by central bank interventions and the €650 million export inflow in February.
S&P warned it could downgrade Albania’s ratings if fiscal performance deteriorates significantly or if balance-of-payments pressures emerge. Conversely, the ratings could be upgraded if institutional capacity strengthens through EU-compliant reforms or if improvements in monetary policy enhance efficiency and credibility.
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