Albania Economy

Economy

Poor and backward by European standards, Albania is making the difficult transition to a more modern open-market economy. The government has taken measures to curb violent crime and to spur economic activity and trade. The economy is bolstered by annual remittances from abroad of $600-$800 million, mostly from Greece and Italy; this helps offset the towering trade deficit. Agriculture, which accounts for about one-half of GDP, is held back because of frequent drought and the need to modernize equipment, to clarify property rights, and to consolidate small plots of land. Energy shortages and antiquated and inadequate infrastructure make it difficult to attract and sustain foreign investment. The planned construction of a new thermal power plant near Vlore and improved transmission and distribution facilities will help relieve the energy shortages. Also, the government is moving slowly to improve the poor national road and rail network, a long-standing barrier to sustained economic growth. On the positive side: growth was strong in 2003 and 2004, the nation has important oil and gas reserves, and inflation is not a problem.