Page 49 - bne IntelliNews Southeastern Europe Outlook 2025

3.0 External Environment
3.1 External Environment – Albania
Albania’s trade deficit has faced upward pressure due to both the slowdown in key eurozone markets and the appreciation of the Albanian lek against the euro, which makes Albanian products less competitive.
According to the latest data from statistical office INSTAT, Albania’s trade deficit widened to ALL 46bn (€460mn) in October 2024, a 10.6% increase y/y and a 13.9% rise m/m.
The rise in the deficit was driven by a 15.2% decline in exports, which fell to ALL31bn. The drop was largely due to reduced exports in key sectors such as construction materials and metals (-8.2pp), textiles and footwear (-3.5pp), and minerals, fuels and electricity (-2.9pp).
In contrast, imports increased by 8.3% m/m, reaching ALL 77bn, while imports were down by 1.5% y/y. The rise was mainly driven by machinery, equipment, spare parts (+2.8pp), food, beverages and tobacco (+0.7pp).
The largest decreases in exports were to Italy, Spain and Kosovo, while exports increased to Greece and Germany. Imports grew from Greece, Turkey and China, while they fell from North Macedonia, Italy and Spain.
Trade with the EU accounted for 60.3% of Albania’s total trade in October, with exports to the EU making up 75.7% of total exports and imports from the EU comprising 54.1% of total imports. Key trade partners include Italy, China, Turkey and Greece.
The lek-euro exchange rate fell through the psychologically important ALL100 to the euro exchange rate in September. As of early December, the lek was trading at around ALL98 to the euro.
The lek’s rise against the euro is attributed to an increased supply of the currency in the local market, mainly driven by tourism, foreign investments, and rising real estate and portfolio investments. Foreign direct investments hit a record €749mn in 1H24, up 8% from the previous year. The lek has also risen to all time highs against the euro in 2024.
3.2 External Environment – Bosnia & Herzegovina According to the IMF, Bosnia is expected to post a current account
49 SE Outlook 2025 www.intellinews.com