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Felix Schwickert, Arthur Metzger

Tourism sector drives growth and shapes Albania's economy

Albania’s tourism industry is booming since 2021. The number of tourists visiting the country each year has doubled between 2021 and 2025. At the same time, the proportion of high-spending European tourists has risen sharply, thanks in part to targeted government measures to expand flight services to Albania. The economy is benefiting enormously from the strength of the tourism sector, which has been central to the average growth of around 4% in recent years. Thanks to tourism, service exports reached record highs, leading to a consolidation of the external position. At the same time, the strong tourism dynamic contributed to an appreciation of the domestic lek, which in turn limited inflation, which is a problem in other parts of the Western Balkans. The tourism sector is expected to be a key driver of economic growth in 2026 as well, where GDP growth is forecast to 3.6%.

  • Albania
NL 01 | January-March 2026
Macroeconomic Analyses and Forecasting
Development of the tourism sector

Albania experiences a tourism boom since 2021. In 2025, 11 million tourists visited the country, more than twice as many as in 2021 (5.2 million). During the same period, hotel overnight stays per year tripled, meaning that tourists stayed significantly longer on average in 2025 than four years earlier. This is partly due to the fact that significantly more European tourists are now visiting the country than before (2025: 34% of all tourists; 2021: 20%). Even though most tourists (2025: 53%) still come from neighbouring countries in the Western Balkans, tourists from non-neighbouring countries are gaining in importance.

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The shift towards more supra-regional tourists is economically important for the country, as they tend to stay longer and spend more.

These positive developments can be seen as a success for governmental and institutional actors, who have supported the sector in recent years through targeted measures. Good examples of successful measures include the abolition of the air traffic tax and the renegotiation of flight concessions, which enabled the construction of additional airports. Both measures were crucial in attracting investment from large airlines in the low-cost segment. As a result, the number of flights to Albania increased fivefold between 2021 and 2025, which has contributed significantly to making Albania an attractive holiday destination for supra-regional tourists.

The tourism boom has been crucial to Albania’s overall economic development in recent years, as we will show in the following.

Economic growth

Between 2022 and 2024, Albania recorded growth rates of around 4% per year. Growth was mainly driven by expanding service exports, which have contributed more to growth than private consumption in recent years, even though the latter accounts for a much larger share of GDP (70%). Two-thirds of service exports are tourism-related, so their strong performance is attributable to the booming tourism sector. Tourism remained the main driver of growth in the first three quarters of 2025, with service exports contributing 2.2 percentage points to economic growth of 3.7%.

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The strength of the tourism sector in recent years has brought about lasting change to the structure of the Albanian economy. Tourism revenue has risen from 12.5% of GDP in 2021 to 20% in 2024: a dynamic that is unique in the Western Balkans. Measured in terms of its size relative to GDP, the tourism sector now plays an even more important role in Albania than in Montenegro, which was previously considered the main tourist destination in the Western Balkans.

Current account

Due to its weak industry, Albania is very import-oriented and has therefore had a current account deficit for years. The high trade deficit is moderated by a surplus in trade in services (tourism) and remittances from the diaspora.

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Since 2021, the current account deficit has narrowed significantly. The IMF estimates a deficit of 2.8% of GDP for 2025. The tourism boom was crucial for decimating the current account deficit since 2021, as it led to an increase in the services surplus from 11.8% to 15.0%. In addition, as described in more detail in the following section, it contributed to an appreciation of the lek and thus indirectly to a reduction in the trade deficit, as the currency appreciation reduced the nominal value of imports.

Exchange rate

As already mentioned, the lek has appreciated significantly since 2021. While in January 2021 one euro was still worth 123.5 lek, the exchange rate in December 2025 is 98.7 ALL/EUR. This corresponds to a cumulative appreciation of the lek of around 27%. There are several reasons for the rapid appreciation, but the main one is the tourism boom. In many places, Albanians are turning away from agriculture, which has been the dominant sector so far, and towards tourism. This increases average labour productivity. In addition, tourists are bringing significantly more foreign currency into Albania. Both factors are contributing to the appreciation of the lek. The Bank of Albania allowed the currency to appreciate but slowed appreciation down in a controlled manner by building up foreign exchange reserves. By the end of 2025, it had built up reserves that could cover seven months of imports, contributing to external stability. In addition, the strong appreciation of the lek reduces import prices and thus keeps inflation low, which, driven by import prices for food, currently is a problem elsewhere in the Western Balkans.

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Outlook

The IMF forecasts economic growth of 3.6% for 2026. Next year, the number of tourists in the country is expected to continue to rise, albeit at a more moderate pace than before. The tourism sector therefore remains central to Albania’s economic development.

The tourism boom brings significant short-term gains in prosperity for Albania but offers only limited growth potential in the long term. It is therefore important to use the momentum to attract targeted investment in other sectors as well, e.g. in the IT & BPO or rubber & plastics sector.

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This newsletter is based on the third edition of our Economic Monitor Albania.

Sources

About the German Economic Team

The German Economic Team is financed by the Federal Ministry for Economic Affairs and Energy (BMWE). Berlin Economics is commissioned with the project implementation.