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Economic deterioration/Business grew by only 1.1% in 2025, the lowest level since 2012

2026-06-24 07:14:00, Ekonomi CNA

Economic deterioration/Business grew by only 1.1% in 2025, the lowest level

Although the economy grew by 3.89% in 2025, according to preliminary INSTAT data, about 72% of the contribution to this growth was brought by only two activities, which are not related to real business activity: Public administration and net taxes.

According to preliminary INSTAT data, which are based on quarterly Gross Domestic Product (GDP) estimates, the activity of "Public administration and defense; compulsory social security; education; health and social work activities" contributed with 1.71 percentage points and "Net taxes" with 1.11 percentage points.

The sectors of the real economy (“Extractive industry; manufacturing; electricity, gas,; water supply”- “Agriculture, forestry and fishing”- “Information and communication”- “Financial and insurance activities”- “Arts, entertainment and recreation, household goods production activities for own use and other services”; – “Scientific, professional and technical activities; administrative and support service activities” – “Real estate activities”- “Wholesale and retail trade; repair of motor vehicles and motorcycles; transport and storage; accommodation and food service activities”- “Construction”) expanded by only 1.08%, contributing to 28% of the growth.

This is the lowest growth in economic activities directly related to business since 2012, excluding 2020, when the country was hit by the consequences of the pandemic.

This is the second year in a row that the “state” has taken over the growth baton. In 2024, public administration and net taxes, for the first time in the history of the transition, contributed to 51% of growth, and in 2025 the trend only deepened. On average, the contribution of these two activities, except for special cases, such as when there are elections or during a pandemic, fluctuates around 15-30%.

The data was released at the conference "How is the economy doing - Analysis of indicators and business prospects", which was held by the American Chamber of Commerce (AmCham) and Monitor Magazine.

“The figures show that the country's economic performance is completely unstable ,” said Ornela Liperi, Editor-in-Chief of Monitor Magazine. “ In the last two years, it has been kept afloat by the increase in salaries in the public sector, which has also influenced the increase in income from contributions and TAP, which brought 77% of the expansion of budget revenues in 2025. Industry and agriculture, which are important sectors for employment, have been in negative territory for years, with a negative contribution of -0.3 percentage points each . ”

In 2025, construction and real estate together contributed nearly 1 percentage point to the economy.

"The growth of the private sector in recent years has been mainly kept afloat by construction, which could continue indefinitely, as it is a cyclical sector, moreover, recent investigations showed that it is serving to introduce informal money into the economy, distorting macro indicators ," said Liperi.

Alongside construction and real estate activity, the other sector that is doing well is trade, accommodation and food service, with a contribution of 0.45 percentage points in 2025. But, despite the increase in the flow of tourists to the country, the contribution of this sector to the economy in 2025 fell significantly, with the record reached in 2023, at 1.56 percentage points.

"While tourism is becoming a major engine of the economy, it remains easily influenced by external factors and, moreover, is failing to boost the value chain in the economy. The main example of this is the decline of agriculture and the increase in dependence on imports for food products," said the editor-in-chief of Monitor.

In line with these developments, the American Chamber of Commerce's 2025 business index also showed that large enterprises in the country are not satisfied with the performance of the economy.

According to the publication's data, the AmCham Business Index for 2025 reached 40.34 points out of a possible 100, marking a decrease of 6.13 points compared to the value of 46.47 in 2024. This is the strongest historical decline since 2012, when the index began to be published.

Perceptions deteriorated in almost all key business climate indicators during 2025. The most pronounced declines were recorded in the domestic political climate (-14.00 points), infrastructure (-12.29 points), performance of the Albanian economy (-11.4), government bureaucracy (-9.54 points), corruption (-9.36 points), business climate (-9.34), informal economy (-6.08 points), order and security in the country (-6.17 points), as well as in monopoly and unfair competition (-4.85 points). /Monitor