Albania’s economic model requires increased investment in people’s skills, business productivity, sustainability and public finance, says the World Bank’s new Economic Memorandum (EMC) for Albania, released today .
Albania has been hit hard by economic shocks following both the 2019 earthquake and the COVID-19 pandemic. Once the ongoing health crisis has passed, the country will need to refocus on its long-term economic objectives, which include building a strong and sustainable growth model to improve the standard of living of citizens, thus helping to encourage people competent and talented to stay in Albania.
“Through this report, we carry out a new analysis of Albania’s development challenges, summarize the progress made in implementing reforms and offer key recommendations that can help Albania achieve a sustainable economic recovery, resilient and inclusive,” says Emanuel Salinas, World Bank Country Director for Albania. “In our recommendations, we also focus on what needs to be done to enable the Albanian people to have healthy and productive lives and more and better jobs.”
The report examines four development priorities for a stronger economy in Albania:
Invest in people and improve skills. To close the skills gap, Albania needs to shift its labor force from low- and medium-skilled jobs to high-skilled ones. This requires improving the learning process, reforming the university system and better aligning skills development with labor market needs.
Increase business productivity and create better job opportunities. GDP per person employed in Albania would increase by 40% if Albanian companies had the same level of productivity as the average Western Balkan company. For Albanian companies to be more productive, the business environment must be improved, innovation must be strengthened and the integration of Albanians into the global economy must be deepened.
Building a more sustainable growth model. More than 70% of Albania’s waste is mismanaged, while earthquakes and floods cause damage that costs an average of $147 million a year. Albania must build an economic model that respects the environment and is more resistant to natural disasters.
Strengthening of public finances. Albania’s public debt is well above the average of the six Western Balkan countries. To ensure the sustainability of the country’s finances, personal income tax rates should be fairer, VAT revenues increased and the credibility of fiscal policy strengthened, in particular through sustained political commitment to the rules. budgets.