The European Bank for Reconstruction and Development (EBRD) said on Thursday it expects Albania's gross domestic product (GDP) to expand by 3.5% in 2026, after an estimated 3.7% in 2025, maintaining its September forecast.

Expected growth is supported by reforms aligning regulations with those in the EU and potential EU-funded investment, the EBRD said in its February edition of Regional Economic Prospects.

"Climate risks, particularly droughts affecting energy production, are partially mitigated by a more diversified renewable mix," the EBRD stated.

The country's economic growth in 2025 was supported mainly by the sectors of real estate, information and communication technology (ICT) services, and construction. Contractions in industry and agriculture held back growth, while exports declined.

Regionally, the EBRD expects the Western Balkans economies to grow 3.1% in 2026, lowering its September prospect by 0.1 percentage point.

"Growth in the Western Balkans slowed from 3.7 per cent in 2024 to an estimated 2.5 per cent in 2025, a weaker-than-expected outturn reflecting, in particular, slower-than-anticipated growth in Serbia. Growth is expected to pick up to 3.1 per cent in 2026 and rise further to 3.5 per cent in 2027, supported by domestic demand, including major public investment and infrastructure projects across the region," the EBRD stated.

The report highlights the increasing diversification of export baskets in the EBRD regions. Most economies now export a wider variety of goods than two decades ago, alongside a rising share of products in which they demonstrate a comparative advantage. At the same time, similarities between the export baskets of China and other economies have continued to grow.

Inflation across the EBRD regions moderated to 5.5 per cent in December 2025. Disinflation was supported by slower nominal wage growth and financing conditions characterized by positive real interest rates, even as fiscal policies in some economies remained more expansionary than previously expected.