AGP Executive Report

Public Procurement: Prosecutors have sent former Deputy Prime Minister Belinda Balluku’s case toward trial over alleged corruption, money laundering and irregularities in nine tenders worth about €1.2 billion, including major road and tunnel projects. Fiscal Policy: Business groups oppose proposed 2027 tax increases, including higher corporate and dividend taxes and a rise in tourism VAT, warning they could deter investment. Fuel Costs: The government is considering scrapping the fuel circulation tax in 2027, which could cut pump prices by up to 32.4 lek per litre if savings reach consumers; vehicle ownership taxes may rise. Automotive: Chinese electric-vehicle maker XPENG has signed a dealer agreement in Albania, planning local sales and aftersales services. Infrastructure: Albania says the first five kilometres of the Kombinat–Plepa road are complete, with contracts signed for the next nine kilometres and funding secured for the remaining section. The World Bank projects Western Balkan growth of 3.4% in 2027, while warning that trade costs and unpredictable rules can hinder jobs and exports.

Growth and Trade: The World Bank forecasts Albania’s economy will grow 3.4% this year and says trade reforms could lift output by up to 10% over the medium term. Across the Western Balkans, growth is projected to reach 3.1% in 2026, but the bank says businesses need lower trade costs and more predictable rules to compete and create jobs. Fiscal Package: Albanian manufacturers warn proposed 2027 tax rises could curb investment and production, including higher corporate and dividend taxes and a VAT increase for tourism. The plan would cut VAT on basic foods to 6%, while raising standard VAT to 21%; manufacturers are seeking consultation before decisions are made. Infrastructure: The first five kilometers of the Kombinat–Ndroq–Plepa road, reaching Peza, are complete. A contract has been signed for the next nine kilometers, with funding secured for the remaining section to Durrës.

Fiscal Policy: Albanian manufacturers oppose proposed 2027 tax increases, warning higher corporate and dividend taxes could add about €85 million a year in costs and curb investment. The draft also cuts VAT on basic foods from 20% to 6%, while raising the standard rate to 21% and tourism VAT to 10%. Economic Outlook: The World Bank forecasts 3.4% growth this year, supported by consumer spending and lending; it says trade reforms could expand the economy by as much as 10% over the medium term. Trade Links: A €310 million highway under construction in Greece is expected to cut travel from Ioannina to Albania’s Kakavia border to 35–40 minutes when it opens in 2029, strengthening cross-border connections.

Food and Tax: Albania’s proposed 2027 fiscal package would cut VAT on basic foods from 20% to 6%, while raising the standard rate to 21% and tourism VAT from 6% to 10%. The food-tax cut is forecast to cost the budget 12.8 billion lek. Agriculture: Just 9% of farm funds had been paid out, pointing to slow delivery of support to producers. Energy Costs: Middle East conflict has pushed Albania’s fuel prices up 25%, raising pressure on businesses and transport operators. Defence Industry: Albania is among the countries set to establish a Canada-led defence and security bank, intended to finance industrial capacity and more resilient supply chains. Cross-Border Transport: Work on Greece’s Ioannina–Kakavia road is advancing; once open, it is expected to cut the drive to the Albanian border to around 35–40 minutes.

Business Impact: Tirana is considering tax relief for businesses hit by protests, while Prime Minister Edi Rama has proposed compensation for affected firms and fines for violent demonstrations. Investment: Albania is among the countries backing a new Canada-led defence bank intended to finance industrial capacity and resilient supply chains; the agreement is due to be signed in November. Construction: Pay in Albania’s construction sector has risen 22%, pointing to mounting labour costs. Agriculture: Only 9% of farm funds have been paid out, raising concerns about support reaching producers. Energy Costs: Fuel prices in Albania have climbed 25% amid Middle East tensions, adding pressure on businesses and transport.

Business Climate: As student protests in Tirana enter their 13th day, Prime Minister Edi Rama has proposed compensating businesses harmed by demonstrations and fining participants in violent or unauthorized rallies; the measures are not yet in force. Construction: Pay in Albania’s construction sector has risen 22%, pointing to higher labour costs for developers. Investment and Agriculture: The government plans to offer state land to investors at lower prices, while only 9% of farm support funds have been paid out. Energy Costs: Fuel prices in Albania have climbed 25% amid the Middle East war, adding pressure on business and transport costs.

Business Climate: Tirana businesses were offered tax relief after protests, as unrest in the capital brought clashes, fires and damage to shops and public buildings. Energy and Exports: Fuel costs in Albania rose 25% amid the Middle East war, while the euro’s fall to 91.10 lek is putting pressure on exporters. Agriculture: Just 9% of farm funds had been paid out, pointing to a slow flow of support for the sector. Investment and Jobs: Albania plans to make state land cheaper for investors, while construction pay jumped 22%.

Business Relief: Tirana businesses have been offered tax relief after protests, as the government responds to disruption and pressure on local firms. Construction: Pay in Albania’s construction sector has jumped 22%, pointing to rising labor costs in a key industry. Agriculture: Just 9% of allocated farm funds have been paid out, highlighting a gap between budget commitments and support reaching producers. Investment: Albania plans to offer state land to investors at lower prices. Exports and Costs: Clothing exports fell 16.2% despite growth in overall trade, while a weaker euro—at 91.10 lek—and fuel costs up 25% are adding pressure on exporters and businesses.

Protests and Business: Fresh clashes in Tirana saw police use tear gas and water cannons after demonstrators set fire to the Agriculture Ministry entrance. Tirana businesses have been offered tax relief amid the unrest. Construction Labour: Construction pay rose 22.1% year-on-year in the second quarter, the fastest increase of any sector, as worker shortages pushed employers to seek foreign staff. Exports and Agriculture: Clothing exports fell 16.2%, while the euro’s slide to 91.10 lek is adding pressure on exporters. Just 9% of farm funds have been paid out. Costs and Investment: Fuel costs have risen 25% amid Middle East tensions; Albania also plans to offer state land to investors at lower prices. Trade: An Albanian buyer found a business partner at China’s Canton Fair after visiting its home furnishings and building materials sections.

Prices: Albania’s inflation eased for a third straight month in September, with core inflation at 2.37% and overall inflation at 2.9%. Higher oil prices could push costs back up, though a stronger lek has helped limit the impact. Construction: Industry pay jumped 22.1% in the second quarter, the fastest rise among sectors, as worker shortages deepen and more firms turn to foreign hires. Agriculture: Just 9% of a $72.4 million World Bank farming project has been disbursed; irrigation upgrades and food distribution centres remain delayed. Tirana Businesses: Tax officials are easing advance profit-tax payments after protests cut customer traffic, event bookings and sales at restaurants and hotels. Trade: Albanian clothing exports fell 16.2%, while the weakening euro is adding pressure on exporters.

Construction: Albanian construction pay jumped 22.1% in the second quarter, more than twice the national average, as worker shortages push firms to recruit from abroad. Agriculture: Just 9% of a $72.4 million World Bank farming project has been disbursed; planned food distribution centres remain unopened and irrigation upgrades have yet to show results. Business Support: Tirana tax officials are easing advance profit-tax payments for businesses hit by protest-related customer losses, with restaurants and hotels reporting sharp drops in sales and bookings. Investment: A proposed law would offer discounted state land to investors in less-developed areas, aiming to attract business beyond tourism, which dominated the previous investment scheme. Exports: Albanian clothing exports fell 16.2% despite an overall rise in trade, adding pressure to a key export sector.

Construction: Wages rose 22.1% in the second quarter, the fastest increase of any industry, as a shrinking workforce left employers short of staff and increasingly reliant on foreign workers. Agriculture: Just 9% of a $72.4 million World Bank farming project has been paid out since February 2024; irrigation upgrades and food distribution centres remain unfinished amid contract delays. Tirana Businesses: Tax officials are giving firms more time to pay advance profit tax after protests drove customers away from restaurants and hotels. Investment: A proposed law would offer discounted state land to businesses in less-developed areas, replacing a scheme that largely attracted tourism projects rather than manufacturing or technology investment.

Investment Policy: Albania plans to offer state-owned land to private investors at discounted rates in less-developed areas, with some adjacent plots available without open competition. The proposed law aims to attract investment beyond tourism, which accounted for 42 of 54 projects approved under the previous scheme; it is expected to reach parliament next year. Costs and Exports: Middle East conflict has pushed Albania’s fuel costs up 25%, while the euro’s fall to 91.10 lek is hurting exporters. Clothing exports have dropped 16.2% despite overall trade growth. Construction and Agriculture: Albania’s construction sector has expanded 36% in four years, and private investment is driving growth in poultry production.

Energy Costs: Middle East conflict has pushed Albania’s fuel costs up 25%, adding pressure on businesses and households as wider economic strain fuels protests. Trade and Manufacturing: The euro’s fall to 91.10 lek is hurting exporters, while clothing exports dropped 16.2% despite an overall rise in trade. Construction and Food Production: Construction has expanded 36% in four years, and private investment is driving poultry-sector growth. Tourism and Investment: Summer tourism growth has slowed. A proposed €1.4 billion resort linked to Jared Kushner remains politically contentious, with critics questioning the fast-tracked project in a protected coastal area. Business Climate: Tirana’s Chamber of Commerce has warned that businesses must not become targets amid political tensions.

Business Climate: Albania’s week-long protests over corruption, living costs and the Kushner-linked resort plan have added uncertainty for businesses. Prime Minister Edi Rama has offered talks, while the Tirana Chamber of Commerce has urged protesters not to target businesses. Energy and Exports: Fuel costs have risen 25% amid the Middle East conflict, while the euro’s fall to 91.10 lek is hurting exporters. Clothing exports dropped 16.2% despite an overall rise in trade. Infrastructure and Accountability: Prosecutors have formally charged former deputy prime minister Belinda Balluku in a corruption case involving alleged tender interference in the €190 million Llogara Tunnel and a €20 million Tirana ring-road contract; the allegations have not been proven in court. Investment and Tourism: Albania’s construction sector grew 36% in four years, while private investment is driving poultry expansion. Tourism growth has slowed, and the proposed €1.4 billion Sazan resort linked to Jared Kushner remains a flashpoint over development in a protected landscape.

Fuel Costs: Albania’s fuel-import bill rose 25.3% from March to September, while volumes increased just 4.9%; the United States became a major supplier as imports from Saudi Arabia fell. Export Pressure: Clothing exports dropped 16.2% despite overall trade growth, while the euro’s fall against the lek is adding pressure on exporters. Construction and Food: Construction output has grown 36% in four years, and private investment is expanding poultry production. Tourism: Summer growth has slowed, and tourism intensity remains well below the EU average. Infrastructure and Investment: A Japan-funded €110 million wastewater project has been reactivated. Prosecutors have also formalised corruption charges over two construction tenders worth more than €200 million, keeping public procurement under scrutiny.