Informality hinders the business environment and competition in Albania, according to the European Commission in Progress Report 2024.

"Albania has a good level of preparation in developing a functional market economy and has made some progress in this area. Economic growth has been strong, helped by strong tourism and rising investment. Inflation continued to fall. Employment and activity rates increased, but unemployment remained relatively high, especially among young people. Fiscal performance improved significantly with lower deficit and debt ratios,” the report noted.

According to the Progress Report, the financial sector remained stable, the profitability of banks increased, while the growth of credit was extended. However, financial intermediation remains low.

“A large informal economy hampers the business environment and competition," the report states. The Commission's recommendations from last year have only been partially implemented and remain largely valid.

In the coming year, Albania should review the draft Medium-Term Revenue Strategy, including measures to increase tax revenues as part of GDP, approve it and ensure its implementation; improving fiscal risk analysis, including capacity building in the new relevant department of the Ministry of Finance, responsible for it, and publishing a comprehensive Fiscal Risk Statement; increasing the transparency and accountability of state enterprises, including the publication of annual financial performance reports; facilitate the implementation of the National Single Project Pipeline (NSPP), including listing projects; and advancing the integration of public-private partnerships (PPP) in the NSPP.

Albania has a level of preparation to cope with competitive pressure and market forces within the EU and has made some progress in this area, but needs further improvements in education and digitization infrastructure, the EC noted.

"Transportation infrastructure improved, but infrastructure gaps remain and digitization and education need further improvement. Exports of services (tourism) increased, but exports of goods remain well below their potential. The Commission's recommendations in these areas from last year have been partially implemented and remain largely valid. In the coming year, Albania should continue to improve and better promote the Vocational Education and Training (VET) system to increase the number of graduates from VET schools and to ensure that work skills match the demands of the labor market; improve the quality and inclusiveness of the education system and advance its digital transformation; strengthening digital infrastructure, including building cyber resilience".

Albania is moderately prepared in public procurement, the EC said, adding that limited progress has been made in aligning the legal framework for public procurement. In the coming year, Albania should in particular: continue efforts to improve competitive procurement procedures; further harmonize the legislative framework with the EU acquis in the field of concessions and public-private partnerships; ensure compliance with the EU acquis and the Stabilization-Association Agreement (SAA) about intergovernmental agreements related to third countries in the field of procurement.