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Foreign investors' profits fell in 2025, after four consecutive years of growth

2026-03-31 07:16:00, Ekonomi CNA

Foreign investors' profits fell in 2025, after four consecutive years of

Foreign investors' profits in Albania suffered a slight decline last year, after four consecutive years of decline.

Balance of Payments data show that foreign investors' investment income for 2025 reached 1.068 billion euros, down 3.8% compared to the previous year. This amount includes distributed or reinvested profits of foreign investors in our country.

If we subtract the value of reinvested profits (837 million euros) from the total amount of investment income, the amount withdrawn by foreign investors last year can be calculated at 231 million euros, a decrease of 9.8% compared to 2024.

In the opposite direction, inflows of investment income (the Albanian economy's income from investments abroad) for 2025 increased to 305 million euros, 3.7% more compared to 2024.

The net investment income balance was broadly negative at 765 million euros. However, the deficit shrank by 6.3% compared to 2024.

Foreign investments in Albania are much larger than Albanian investments abroad, so the net balance of investment income has been historically negative.

The rapid recovery of the economy after the pandemic has also brought positive effects to foreign companies operating in Albania, contributing to increased profits.

A good part of the growth can be attributed to the strengthening of the Lek against the Euro.

Foreign companies generally generate their revenues in Lek, while distributing profits to shareholders in foreign currency. The strengthening of the Lek has caused the same amount of domestic currency to be translated into a higher value in foreign currency, mainly in Euro.

For this reason, among the actors who have benefited from the Euro's decline in exchange rates are foreign investors.

Since a good portion of profits are not distributed, but are reinvested, the strengthening of the Lek has indirectly influenced the growth of foreign investments in recent years.

According to the Bank of Albania, for 2025, reinvested profits reached 837 million euros or almost 51% of total foreign direct investment.

However, this upward trend in foreign investors' profits seems to have slowed down last year, perhaps signaling the peaking of the positive cycle effects that the Albanian economy followed after the pandemic, but also the slowing down of the effects related to the strengthening of the Lek in the foreign exchange rate.

According to statistics from the Bank of Albania, the Euro was exchanged on average last year for 97.85 Lekë, the lowest level ever recorded. However, the rate of exchange rate decline in 2025 was significantly lower compared to the previous two years. For 2025, the official average Euro-Lek exchange rate fell by 2.8%, from 7.4% in 2024 and 8.6% in 2023. /Monitor