Albania’s economic structure is undergoing a notable transformation, with a clear shift from production-based sectors like agriculture and industry toward services and consumption-driven sectors, according to official data from INSTAT for the year 2024.
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Sharp Decline in Agriculture and Industry
The agriculture, forestry, and fishing sector contributed 15.45% to the country’s GDP in 2024, down from 16.27% in 2023 — a drop of 0.82 percentage points. Over the past decade, the sector has seen a steady decline, falling from 19.24% in 2014 to its current level. Despite this decrease, agriculture remains a major component of Albania’s economy, especially when compared to the EU average of just 1.6% of GDP in 2024.
In the first quarter of 2025, agriculture contracted by -2.7%, marking the fifth consecutive year of decline. Experts cite rising production costs and rural depopulation — which is leading to the collapse of many family farms — as key challenges facing the sector.
Similarly, the industrial sector also saw a downturn, contributing 8.47% to GDP in 2024 compared to 9% in 2023. Both heavy industry and manufacturing suffered losses. This decline is attributed to increased production costs (driven by higher minimum wages and raw material prices), as well as a weaker euro and reduced foreign demand. Industry in Albania has now entered its third consecutive year of contraction in 2025, accompanied by business closures, reduced sales, and job losses.
Construction and Services Take the Lead
In contrast, the construction sector expanded its share of the economy from 11.6% in 2023 to 11.95% in 2024. Growth was primarily driven by new residential and tourism-related projects in Tirana and along the coast, including villas and hotels. Although construction continues to play a major role in GDP growth, its long-term employment and productivity impacts remain limited.
Tourism-related sectors also showed strong performance. The accommodation and food services sector increased its contribution from 3.63% to 4.11%, reflecting Albania’s rising popularity as a tourist destination. This is a significant leap from just 1.54% in 2014.
Public service sectors also saw growth. The education sector rose from 2.93% to 2.97%, and health and social work activities increased from 3.20% to 3.31%, supported by rising public sector wages.
Meanwhile, the real estate and rental activities segment grew slightly from 4.94% to 4.95%, and administrative and support services expanded from 3.89% to 4.20%, indicating broader diversification within the service economy.
Technology Sector Sees Setback
One notable exception in the services sector was information and communication, which declined significantly from 3.71% of GDP in 2023 to 2.66% in 2024. This drop suggests underlying challenges in advancing the technological foundation of the economy — a critical component for sustainable development.
A Service-Driven Economic Future
Overall, the latest data paints a clear picture of Albania’s evolving economic landscape: the country is moving away from traditional production sectors and increasingly reliant on services and consumption. While this transition brings short-term growth and job creation, the decline in agriculture, industry, and technology-related sectors may pose long-term risks to sustainable economic development.
Policymakers are now faced with the challenge of balancing this shift by supporting innovation, industrial productivity, and rural revitalization, ensuring that the foundations of long-term growth are not eroded in pursuit of short-term gains.