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"As we conclude and sign off on the CEE sourcing projects for textile and refinery equipment products, I would like to express my appreciation to you and your team for your support. [...]"
Global Market Development Analyst, One of the top five oil producers globally
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We are a member of the Strategic and Competitive Intelligence Professionals (SCIP)
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We are a member of the European Association of Opinion and Marketing Research Professionals ESOMAR.
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| Why to enter this market? |
- Fastest growing country in south-eastern Europe in the last decade
- Low inflation rate
- 80% of exports go to the EU
- Free trade agreements with the rest of the Balkan countries
- Inexpensive utilities
- Young labour force
- Simplification of procedures
- Ongoing privatisation programme
- Widespread Italian or Greek language skills
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Business and economic environment
Albania’s GDP increased relatively steadily: the average figure was 6% per year between 2004 and 2008 and 3% between 2009 and 2010, with the inflation rate reaching 3.6% in 2010. Albania’s GDP consists of:
- industry (approximately 23.5%),
- services (approximately 57.6%),
- agriculture (18.9%)
Payments from Albanians working abroad, predominantly in Greece and Italy, are a significant catalyst for economic growth and help to offset the trade deficit. However, these declined from 12-15% of GDP before 2008 to approximately 9% in 2010 as a result of the global economic downturn. Furthermore, the country has a large grey economy which could be as much as 50% of official GDP. Albania remains one of the poorest countries in Europe, with over half of all working people employed in, and approximately 23.5% of GDP coming from, agriculture.
Nevertheless, Albania has made a remarkable recovery and was one of few countries in Europe to maintain positive economic growth in 2009. This has been a result of a combination of limited financial exposure to international markets and an expansionary fiscal policy initiated before the crisis, with increased public investment (mainly in roads) and a series of salary and pension increases. Albania’s fiscal policy offers encouragement to investors, and the country also now has a favourable tax environment, with a flat corporate rate of 10%, in addition to low utility costs. Between 2002 and 2008, poverty was reduced from 25% to 12%, one of the most sizeable reductions in Europe and Central Asia.
Albania is also trying to attract foreign investment and to promote domestic investment by rationalising and uniformly applying business laws, improving transparency in business procedures, restructuring the tax system, reducing corruption in bureaucracy and resolving property ownership disputes. It has a great deal to offer, with key areas such as energy, tourism, mining, textiles, agriculture and BPO centres worthy of investigation. Despite this, infrastructure development and major reform in areas such as tax collection, property law, and improvements to the business climate are proceeding slowly.
Albania has a very negative trade balance. In 2010, its trade deficit stood at -21.6% of GDP, or EUR 2.11 billion. There was a reduction in both imports and exports in 2009, reflecting a depressed global economy.
Despite healthy growth, Albania’s foreign trade depends heavily on the EU member countries, which account for two-thirds of its foreign trade operations (82% of exports and 69% of imports in 2010). Italy and Greece remain its main trading partners. One characteristic of Albanian exports is re-export after the processing of raw materials. This is reflected in exports of the “textiles and footwear” group, which is 61% of the export total.
Albania has concluded Free Trade Agreements (FTAs) with Macedonia, Croatia, UNMIK (Kosovo), Bulgaria, Romania, Bosnia and Moldova. In April 2006, these bilateral agreements were replaced by a multiregional agreement which came into force in May 2007 and is based on the Central European Free Trade Agreement (CEFTA) model.
The unemployment rate has been falling gradually since 2002 and reached 13.5% in 2010. The number of people employed in the public sector has fallen as a result of systematic reforms in various areas of the economy. This is also a consequence of various privatisation processes, including that pertaining to the Savings Bank of Albania.
Political environment
Albania was the last of the Central and Eastern European countries to experience democracy and free market reforms. Its current Constitution was adopted by referendum in 1998. It should be noted that Albania started from a relatively disadvantageous position, because of the disastrous economic policies of its previous ruler, Enver Hoxha. The transition from a centrally planned economy to a market-orientated system has, therefore, been very difficult for Albania and has been comparable with the country’s communist era.
Albania’s political system is based on a one-chamber democracy. The People’s Assembly (Kuvendi Popullor) consists of 140 seats, 100 of which are determined by direct popular vote. The remaining seats are distributed by proportional representation. All members serve four-year terms. The President is the head of state and is elected by a three-fifths majority vote of all Assembly members. The President serves a term of 5 years and has the right to two terms.
After the signing of the Stabilisation and Association Agreement in June/July 2006, EU ministers urged Albania to introduce essential reforms, particularly with regard to freedom of the press, property rights, institution building, respect for ethnic minorities and the observance of international standards in municipal elections. Albania is not an EU member. It has accession plans but is not a candidate. However negotiations with the EU are underway.
Since the June 2009 parliamentary elections, the country has experienced political tension, as the opposition Socialist Party of Albania claims that the ballot was rigged and is asking for a new round of elections. The Prime Minister, Sali Berisha, has rejected the accusations and claimed that the anti-government protesters who were shot dead in January 2011 were involved in a coup d’etat. The US and EU have called for dialogue.
Social environment
The regime change in 1992 resulted in religious freedom in Albania. However, the majority of Albanians do not practice any religion today but prefer to affiliate themselves with one of the four religious traditions. In central and northern Albania, many people associate themselves with Islam. There are Orthodox Christians in the south-east and Roman Catholics in the extreme north of the country. Nevertheless, Albanian culture sees religion more as a matter of community affiliation and tradition, rather than individual devotion. Religious observance is mostly superficial, and religious discrimination is rare.
The Albanian population is considered to be young, with an average age of 31.7. After 1990, the Albanian population faced the problems of increased migration and uncontrolled population movements, which have affected the demographic distribution of the population between the rural and urban areas.
Corruption is one of Albania’s most serious problems - the corruption perception index (CPI) figure, 3.3, is one of the lowest in Central and Eastern Europe. It is exceeded only by Bosnia and Herzegovina, Ukraine and Russia.
Infrastructure and technological environment
Recent administrations have improved the country’s infrastructure and have thus opened up competition in business related to harbours, railways, telecommunications, electricity generation, natural gas distribution and airports.
However, Albania’s rail system is in need of substantial investment, in direct links with neighbouring countries in particular, and the entire railway is only 423 km long. At present the major cities of the country are connected by first class national roads. However, the poor quality of inland road connections favours sea transport as a method of moving goods to destination markets. The total length of the network is 18,000 km, of which 5,400 km is paved. At the moment there is only one civilian airport - Tirana International Airport. This was upgraded in 2007, when improvements included a new terminal building and airport access roads. The airport now has a capacity of around 1.5m passengers and offers direct flights to and from London, New York and other European cities, attracting tourists and foreign investors from around the world.
Despite new investment in fixed telephone lines, the density of main lines remains the lowest in Europe, with approximately seven lines per 100 people, but mobile telephone use is widespread. There were about 363,000 fixed line users and 4.16 m mobile phone users in 2009. In addition, there were 1.3 m internet users in 2009, almost 44% of the population, and 15,098 hosts were registered in 2010.
General data
Area: 28,748 sq km
Population: 2,994,667 (2011)
Capital: Tirana
Language: Albanian
Ethnic groups: Albanian 98.6%, Greek 1.2%, others 0.2% (2004)
National boundaries: Greece, Macedonia, Montenegro, Serbia
Major economic indicators
| |
2007 |
2008 |
2009 |
2010e |
2011f |
| GDP (EUR bn) |
7.28 |
7.95 |
9.59 |
9.81 |
10.12 |
| Population (m) |
3.13 |
3.15 |
3.15 |
3.15 |
2.99 |
| GDP per capita (EUR) |
2,164 |
2,326 |
3044 |
3,114 |
3,384 |
| GDP (constant prices y-o-y %) |
5 |
6 |
6.1 |
2.3 |
3.2 |
| Exports, real, y-o-y (%) |
17.6 |
25.5 |
15.8 |
43.5 |
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| Imports, real, y-o-y (%) |
14.1 |
25.7 |
16.9 |
1.3 |
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| CPI (average, y-o-y %) |
2.5 |
2.9 |
2.2 |
3.7 |
3.6 |
| Central bank reference rate |
5.5 |
6.25 |
6.25 |
5 |
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| Monthly wage, nominal (EUR) |
234 |
288 |
276 |
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| Unemployment rate (%) |
13.8 |
13.2 |
13.8 |
13.5 |
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| FDI % GDP |
0.26 |
0.46 |
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| BIZ % PKB |
3.6 |
5.8 |
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| FX and gold reserves (EUR bn) |
|
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2.37 |
1.99 |
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| Exchange rate to USD AVG |
98.1 |
90.4 |
86.58 |
102.84 |
101.2 |
| Exchange rate to EUR AVG |
123.1 |
123.1 |
122.8 |
139.08 |
141.05 |
Last update: Q1 2011
Useful data
Currency: Lek (ALL)
Exchange rate: 1 Leke=0.0070 EUR (end of 2010)
Time zone: GMT +1
Area code: +355
If you would like to find out more on the Albanian market opportunities please do not hesitate to contact us directly:
phone: (48 12) 292 22 50
faks (48 12) 292 22 99
e-mail: info@pmrconsulting.com
PMR Business Solutions in Albania
If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs.
Consulting in Albania
PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
Market research in Albania
PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses.
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