Nearly four decades after the death of Enver Hoxha, the tyrant who made Albania one of the most isolated countries in Europe, tourism has grown very rapidly in recent months. The number of nights spent by foreign visitors in May was 2.5 times higher than in the same month in 2019. According to information from Eurostat, this figure is not a surprise: the small Balkan country far exceeded its pre-pandemic figures since autumn 2021, while major tourist destinations like France and Italy have not yet managed to return to previous levels.
Albania offers affordable prices, crystal clear waters and exoticism without having to leave Europe. These are the foundations of the digital marketing campaign that attracted thousands of people this summer to a country of 2.8 million that has had to recruit more workers from India, Bangladesh and Pakistan, between other countries, to meet the increase in demand. . “Of the five hotels we stayed in, four opened last year and one opened this year,” says Marcos Fernández, a high school teacher from Madrid, Spain, who visited Albania in August. “The whole country is under construction.”
Albania recorded a 45% year-on-year increase in the number of building permits in 2021, reflecting an upward trend which, according to government data, was supported in 2022 by the hotel sector, which recorded an increase of its activity by 55%. Besides the tourism boom and construction work following the 2019 earthquake, the construction boom is also due to remittances from the large diaspora of 1.2 million Albanians abroad , which represents more than 9% of the country’s GDP, according to World Bank estimates.
In addition to legal transfers, funds from criminal activities are flocking to construction, explains Islam Jusufi, professor of political science at Epoka University. “A significant part of the skyscrapers built in Tirana and other cities are acquired by people whose income comes from organized crime,” he explains. Albanian criminals expanded on their initial business of illegally exporting cannabis, Jusufi explains, and began running international drug trafficking networks. involving Latin American countries.
Fortunately, organized crime numbers appear to be starting to decline in terms of their importance to the national economy. According to Jusufi, this is partly due to judicial reforms requested by the United States and the European Union, which removed a significant number of judges whose impartiality was difficult to verify. He adds that there is also a new awareness among members of the ruling Socialist Party: “There are already signs of progress, such as the imprisonment of a former interior minister who had been associated with the one of these criminal groups. »
“I don’t believe that any economic benefit can come from organized crime,” replies Isilda Mara when asked about the effects that an anti-crime campaign could have on the real estate sector. “The negative effects that it (organized crime) generates on the economy, on the free market, on competitiveness, on corruption and on the dysfunction of the judicial system and public order are very significant,” explains- she e-mailed from Vienna, where she is a specialist on Albania at the Institute for International Economic Studies.
In Albania, agriculture has traditionally represented the main source of employment, but it has now also become a foreign exchange generator. Even if family micro-farming still predominates in a self-sufficient country in the 1980s, productivity has increased at the same rate as exports, with growth in 2022 of 15.6% for foreign sales of melons, watermelons , tomatoes, cucumbers and citrus fruits. , among other cultures.
“Agricultural export data had started to improve before the pandemic, in 2017 and 2018; it then recovered in 2022 and performed particularly well in 2023,” says Meleq Hoxhaj, an independent researcher and co-author of a research paper on the link between globalization and unemployment in Albania. According to Hoxhaj (who is no relation to the late dictator), any job losses that might have resulted from the rapid mechanization of the Albanian countryside were offset by increased exports.
Progress
“Albania was at the bottom of Europe and Central Asia in terms of poverty levels, and in 30 years it reached an upper middle income level, with virtually all indicators pointing in the right direction” , says Emanuel Salinas, World Bank representative in Tirana. . “Poverty is constantly declining and GDP is growing rapidly,” he adds. You don’t have to go back to the 1990s to see progress. Between 2010 and 2019, GDP per capita grew at an average annual rate of 2.9%, according to the World Bank. In just seven years, poverty has fallen from 41.5% of the population (2016) to 23.9% (2023).
Eliminating this figure is not the only challenge facing the country. Albania now faces a problem that countries like Argentina or Venezuela which could only be dreamed of, namely the upward pressure on the local currency generated by the massive inflow of foreign exchange via foreign investments, remittances, tourism and agricultural exports. From the 135 leks needed to acquire one euro ten years ago, it has increased in recent years to a range of 120 leks per euro. This barrier was crossed again in July 2023, when the Albanian currency appreciated to 101 leks per euro. “To alleviate this pressure, the Bank of Albania withdrew euros from the market, but this was not enough. Even though the strong appreciation of the lek has reversed somewhat, it still represents a huge burden for exporting companies, which, as an incentive, have obtained tax refunds from the government,” explains Hoxhaj.
The Albanian government is aware that tax incentives and foreign exchange interventions only serve as a temporary measure. It therefore decided to develop digital export services and improve innovation and competitiveness in the agriculture and tourism sectors. Even if the strategy does not yield immediate results, one thing is clear: a currency revaluation can pose a challenge. Marcos Fernández testifies: “I spent 50 euros on a dinner for two without even realizing it. »
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