The Albanian economy is expected to slow down in 2026. The Vienna Institute has lowered its growth forecast for Albania to 3.6%, down from the 3.9% projected in its summer forecast a year ago. However, Albania remains among the fastest-growing economies in the Western Balkans.

At the regional level, the slowdown is expected to be even more pronounced. For the six Western Balkan countries, the Vienna Institute forecasts average economic growth of 2.5% in 2026, down from the 3.6% projected a year ago, reflecting a deterioration in expectations for the region's economies.

The sharpest downward revision is for Serbia, where economic growth is now expected to be only 2.0%, compared with 4.0% in the previous forecast. Kosovo also has a weaker outlook, with growth expected at 3.3%, down from 3.9%, while Montenegro's forecast has been reduced to 2.8%, from 3.3%. Bosnia and Herzegovina's growth forecast has been cut to 2.3%, from 2.8%, while North Macedonia is the only country in the region whose outlook has improved, with growth revised up to 2.9% from 2.8% in last summer's forecast.

The economies of Central, Eastern and Southeastern Europe continue to show steady growth. This also applies to most of the eastern member states of the European Union. Although energy prices and, consequently, inflation are expected to remain above pre-war levels for an extended period, there are no signs of an inflationary shock similar to the one that followed the Russian invasion of Ukraine.

"However, this depends on the conflict with Iran not escalating again, the Strait of Hormuz remaining open, and energy markets returning to normal," said Richard Grieveson, Deputy Director of wiiw and lead author of the summer forecast.