SME Policy Index for Western Balkans and Türkiye 2026 – Economy Profile for Albania

Albania: SME sector overview

The SME landscape

Albania is a small, upper-middle-income economy with a population of approximately 2.4 million inhabitants and a gross domestic product (GDP) of approximately EUR 25 billion in 2024. GDP per capita reached EUR 10 500, equivalent to approximately 37% of the EU-27 average in purchasing power standards (Eurostat, 2026[9]), yet insufficient to close the income gap within the foreseeable future. At current trends, the World Bank projects that no Western Balkan Six (WB6) economy will reach current EU per capita levels within the next 40 years (World Bank, 2025[10]). The sectoral structure further raises questions about the sustainability of convergence. Agriculture accounts for 17.9% of gross value added (GVA) – approximately ten times the EU-27 average – while manufacturing contributes only 7.5%, roughly half the regional norm. Construction (13.8% of GVA) and wholesale and retail trade (13.9%) together represent more than one-quarter of output (Eurostat, 2026[9]). Tourism has become central to the economy, accounting for 21.5% of employment in 2023 (OECD, 2025[11]), but this concentration in domestically consumed services rather than in tradeable, higher-value-added production constrains the economy’s capacity for productivity-driven convergence.

The macroeconomic environment has improved markedly since 2020, though structural weaknesses and demographic pressures are intensifying. Cumulative real GDP growth of approximately 20% between 2019 and 2024 places Albania among the Western Balkans and Türkiye (WBT) region’s stronger performers (Eurostat, 2026[9]), with GDP projected to stabilise at 3.5% in 2026-2027 (World Bank, 2025[10]). Inflation has remained comparatively moderate: headline inflation stood at 2.2% at the end of 2025, the lowest in the region, partly offset by a substantially stronger lek, which appreciated from ALL 123/EUR in 2019 to ALL 100.5/EUR in 2024 and ALL 98/EUR in 2025 (Bank of Albania, 2026[12]). Labour market indicators are among the strongest in the Western Balkans: the employment rate (for adults aged 20-64 years) reached 74.1% in 2024, unemployment fell to 8.6% in the first half of 2025 – among the lowest in the region – and the female employment rate reached 61.7% in 2023, just 4 percentage points (p.p.) below the EU average (OECD, 2025[11]; INSTAT, 2026[13]). Nevertheless, the demographic trajectory poses a structural challenge: the 2023 census recorded a population decline of approximately 430 000 from 2011 (about 14%), driven by sustained emigration averaging 50 000 persons annually and declining fertility. In the first half of 2025, total employment fell by 0.9% year-on-year as agriculture shed jobs and the working-age population shrank, even as services employment expanded by 6.3% (World Bank, 2025[10]). The export base remains narrow: goods exports stood at 13.2% of GDP in 2023, among the lowest in the WBT region and far below the EU average of 38% (OECD, 2025[11]). While services exports – principally tourism – partially offset this imbalance, the narrow manufacturing base and limited productive complexity directly constrain SME internationalisation prospects.

Structure and dynamics of the SME sector

Albania’s business economy is overwhelmingly dominated by micro, small and medium-sized enterprises (MSMEs), which account for 99.9% of registered firms, 82.5% of employment and 78.2% of GVA (Figure 1) (INSTAT, 2025[14]). These shares considerably exceed those observed in the EU-27, where MSMEs contribute roughly 64% of employment and 51% of value added, and are higher than in most WBT comparators (Eurostat, 2026[15]). The dominance of MSMEs reflects a structural characteristic: the large-enterprise segment is exceptionally thin, with only 168 firms generating approximately 17.5% of employment and 21.8% of value added (INSTAT, 2025[14]). There is a notable absence of large, homegrown companies that typically serve as supply-chain anchors, drive technological advancement, and stimulate demand for MSME suppliers.

Figure 1. Business demography indicators in Albania, 2019 and 2023

Note: Figures are reported for the most recent year for which data are available.

Sources: INSTAT (2025[14]; 2025[16]).

Enterprise dynamics between 2019 and 2023 point to a broadening base, driven predominantly by microenterprises. The total number of MSMEs grew from approximately 103 900 to 117 100, a compound annual growth rate (CAGR) of 3.0%, driven overwhelmingly by a 3.1% expansion of the micro segment, which added approximately 12 700 new firms. The small segment grew more modestly (+1.9% CAGR), while the medium segment was essentially stagnant (+0.7%), and large enterprises contracted (-1.5%) (INSTAT, 2025[14]). Business demography data published for the first time by INSTAT confirm the vibrancy of the Albanian enterprise base: active enterprises rose from 114 200 in 2021 to 125 700 in 2023, with new enterprise births averaging approximately 14 400 per year and enterprise deaths remaining remarkably low at 560-1 000 annually (INSTAT, 2025[17]).

The dynamism of the enterprise base has not, however, translated into proportionate international engagement. Goods exports stay relatively low, and the trade balance remains structurally dependent on a thin tier of large firms, which generate one-third of total export value despite accounting for under 3% of exporters. MSME export value share has risen – from 60% in 2019 to 67% in 2023 – but this largely reflects the erosion of large-enterprise exports rather than structural upgrading. The average export value per firm declined from EUR 759 000 in 2022 to EUR 696 000 in 2024, indicating broadening without deepening. Exports account for just 9.4% of aggregate MSME turnover, confirming that the vast majority of Albanian MSMEs operate in a purely domestic commercial circuit. Only 2.6% of MSMEs export goods at all, compared to 11.3% that import – an asymmetry of more than four to one – and export participation rises steeply with scale, from barely 1% among microenterprises to 38% among medium-sized firms. The number of MSME exporters has nevertheless grown faster than the enterprise base (4.7% vs. 3.0% CAGR), but the aggregate goods trade coverage ratio, which briefly improved to 51-52% in 2022-2023, fell back to 43% in 2024 as large-firm export coverage collapsed by 17 p.p., underscoring both the fragility of the export base and the urgency of broadening MSME participation in international markets (INSTAT, 2026[18]).

Of the newly born enterprises in 2023, 56% had zero employees and a further 39% had one to four employees. Wholesale and retail trade (26%), accommodation and food services (13%) and construction (8%) accounted for the largest shares of new births, suggesting that much of the dynamism is concentrated in small-scale, domestically oriented service activities rather than in manufacturing or technology-intensive sectors. The enterprise death rate remains remarkably low: only 810 enterprises ceased activity in 2023, of which 62% had zero employees, pointing to the limited exit of established firms (INSTAT, 2025[17]).

The sectoral composition of the MSME economy is heavily tilted toward domestically oriented services (Table 4). Wholesale and retail trade alone accounts for 28% of MSME employment and half of MSME turnover, making it by far the most commercially significant sector for Albanian MSMEs. Together with accommodation and food services (12% of MSME employment) and construction (11%), these three service sectors absorb over half of the MSME workforce while generating nearly two-thirds of MSME revenue, forming a cluster of domestically consumed activities with limited scope for productivity-driven growth or international integration. Manufacturing, the principal tradeable sector, accounts for 17% of MSME employment but only 11% of turnover; it is also the sector where the gap between MSME and large-enterprise performance is most visible, as large firms generate 27% of sectoral turnover with just 24% of the workforce. The sectors with the strongest large-enterprise dominance are electricity, gas and water (where large firms account for 64% of employment and 48% of turnover) and mining (37% and 49%, respectively), both capital-intensive industries where MSMEs play a secondary role. At the other end of the spectrum, accommodation and food services (98% MSME employment, 97% turnover) and trade (93%, 89%) are near-entirely MSME sectors, though this dominance also reflects the absence of large domestic hospitality and retail chains rather than a competitive strength of smaller firms (INSTAT, 2025[14]).

Table 4. Sectoral profile of MSMEs in Albania, 2023

Sector	Share of MSME employees1	Share of MSME turnover2	MSME share in sector employment3	MSME share in sector turnover4	Sector % of GVA5
Wholesale and retail trade	28%	50%	93%	89%	14%
Other services	21%	11%	82%	86%	18%
Manufacturing	17%	11%	76%	73%	8%
Accommodation and food services	12%	4%	98%	97%	5%
Construction	11%	11%	84%	83%	14%
Transport, information and communication	8%	7%	76%	71%	6%
Electricity, gas, water and waste	2%	5%	36%	52%	3%
Mining and quarrying	1%	1%	63%	51%	1%

Notes: INSTAT publishes SBS data either by enterprise size class or by economic activity but does not provide a cross-tabulation of indicators by sector and size simultaneously. The only published source that combines both dimensions is a pair of charts in the annual SME publication (Figures 4‑5), which report the percentage distributions of employment and turnover by size class within each sector. The absolute values underlying Columns 1-4 were derived by applying these published percentage shares to sector-level totals from the SBS. Value added by sector and size class is not available; GVA shares in column 5 refer to 2024 National Accounts data.

Reading guide: Columns 1-4 show how the MSME workforce and revenue are distributed across sectors (i.e. how important each sector is for MSMEs). Columns 3-4 show how dominant MSMEs are within each sector (i.e. how important MSMEs are for the sector). Column 5 provides macroeconomic context. Rows are sorted by contribution to MSME employment (Column 1), from highest to lowest.

1. Share of total MSME employment. Each sector's share of aggregate MSME employment (462 098 persons). The eight sectors shown cover 100% of the Structural Business Statistics (SBS) business economy.

2. Share of total MSME turnover. Each sector's share of aggregate MSME turnover (ALL 2 749 billion). Trade alone accounts for half of all MSME revenue.

3. MSME share in total sector employment. Lower values indicate a significantly large-enterprise presence (e.g. electricity/utilities at 36%).

4. MSME share in total sector turnover. Values below 75% signal sectors where large enterprises generate a disproportionate share of revenue relative to their headcount.

5. Sector share of total gross value added (GVA) (GDP basis, 2024). Agriculture (17.9% of GVA) is excluded from the SBS business economy. "Other services" aggregates financial and insurance activities, real estate, professional and administrative services, arts, entertainment, and other personal services.

Sources: INSTAT (2025[14]; 2023[19]); Eurostat (2026[9]).

Labour productivity

Labour productivity grew rapidly across all size classes between 2019 and 2023 (Table 5). MSME productivity expanded at a compound annual rate of approximately 13.6% in nominal terms, substantially outpacing large enterprises (6.7%). Adjusted for cumulative price increases of roughly 17%, real MSME productivity growth amounts to approximately 9.1% per year, an exceptionally strong performance by regional standards. These gains were accompanied, unusually, by rising MSME employment (+1.6% CAGR), contrasting with the pattern observed in several WBT comparators, where declining headcounts partly drove nominal productivity gains (INSTAT, 2025[14]). The simultaneous expansion of both employment and productivity suggests genuine improvements in output efficiency, though the significant appreciation of the lek against the euro (approximately 12% over the period) also contributed to inflating EUR-denominated productivity figures. Despite these growth rates, the level of Albanian labour productivity remains a critical concern: output per hour worked stood at USD 17.6 in 2020-2023, the lowest in the WBT region and just 26% of the EU average (OECD, 2025[11]). The low absolute level of productivity has direct consequences for internationalisation. At EUR 11 569 in value added per employee, microenterprises – which account for half of all MSME exporters – generate barely sufficient margin to absorb the fixed costs of exporting, helping to explain why their export participation rate remains below 2% (INSTAT, 2026[18]).

Table 5. Key indicators of the MSME sector in Albania, 2023 levels and 2010-2023 growth

	Micro	Small	Medium	MSME total	Large	MSME share1
Levels (2023)
Number of enterprises2	109 661	6 176	1 286	117 123	168	99.9%
Persons employed3	212 212	120 564	129 322	462 098	97 824	82.5%
Value added (EUR millions)4	2 455	2 247	2 194	6 896	1 922	78.2%
Labour productivity (EUR)5	11 569	18 636	16 968	14 924	19 645	76.0%
Compound annual growth rate, 2019-20236
Number of enterprises	+3.1%	+1.9%	+0.7%	+3.0%	−1.5%	+0.0
Persons employed	+2.0%	+1.3%	+1.4%	+1.6%	+0.04%	+0.9
Value added	+19.5%	+14.2%	+12.7%	+15.4%	+6.7%	+5.8
Labour productivity	+17.2%	+12.7%	+11.2%	+13.6%	+6.7%	+16.8

Notes:

1. MSME share: In the upper panel, the MSME share in the economy-wide total. In the lower panel, the change in this share between 2019 and 2023 in percentage points.

2. Number of enterprises: Count of active legal entities in the business economy, classified by number of employees (micro: 1-9; small: 10-49; medium: 50-249; large: 250+).

3. Persons employed: Total persons engaged in productive activity, including employees and working proprietors, measured as annual averages.

4. Value added: Gross value added (GVA) at factor cost, in EUR millions at current prices, converted at the annual average exchange rate (ALL 108.5/EUR in 2023).

5. Labour productivity: GVA at factor cost per person employed (EUR). Standard Eurostat Structural Business Statistics (SBS) measure of apparent labour productivity.

6. Compound annual growth rate (CAGR): Annualised growth rate over 2019-2023, calculated as (Value₂₀₂₃ / Value₂₀₁₉)^(1/4) – 1. All rates nominal. Cumulative inflation ~17%; real rates approximately 4 p.p. lower.

Coverage: Business economy excluding agriculture (NACE A) and financial and insurance activities (K).

Sources: INSTAT (2025[14]); Bank of Albania (2026[12]); author calculations.

The pattern of domestic productivity convergence warrants cautious interpretation, as it reflects distortions in Albania's enterprise structure as much as genuine MSME upgrading. The MSME-to-large enterprise productivity ratio rose from 59.2% in 2019 to 76.0% in 2023, a convergence of 17 p.p. in four years, surpassing the EU average of approximately 60% (INSTAT, 2025[14]; Eurostat, 2026[20]; Eurostat, 2026[15]). However, this trend is partly driven from above. Albania's large-enterprise tier is exceptionally thin and underperforms relative to EU peers, so the benchmark against which MSMEs are measured is itself unusually low, a “missing top” that flatters the convergence narrative. A further anomaly reinforces this reading: contrary to the standard pattern in EU economies, small enterprises in Albania are more productive than medium-sized ones (EUR 18 636 vs. EUR 16 968 in value added per employee), an inverted hierarchy also observed in North Macedonia that points to binding constraints at the transition from small to medium scale, whether fiscal and regulatory thresholds that penalise growth beyond certain employment or revenue levels, or organisational bottlenecks in managing the step up in complexity.

SME outlook 

The characteristics of Albania’s MSME sector present a mixed picture of dynamism alongside structural constraints. On the positive side, enterprise creation rates are among the highest in the WBT region, the MSME base has expanded across all size classes, and both employment and productivity have risen simultaneously – a combination that few WBT economies have achieved. Albania’s labour market indicators – the highest employment rate in the region, above the EU-27 average, and the relatively low unemployment rate – provide a favourable demand environment for SMEs. Against these gains, the OECD’s Economic Convergence Scoreboard highlights persistent weaknesses: Albania ranks third among Western Balkan economies in overall EU convergence, but its score has declined since 2014-16, driven primarily by the business environment cluster, where the economy ranks lowest in the region (OECD, 2025[11]).

The overwhelming concentration of MSMEs in micro-scale, domestically oriented services – trade, accommodation, construction – suggests the enterprise base is growing in breadth rather than in depth. The persistently high share of agriculture in GVA (approximately 18%), combined with a manufacturing sector contributing barely 7.5% of value added, points to an economy that has not yet completed the structural transformation associated with sustained productivity convergence (INSTAT, 2026[18]). Informal employment, estimated above 25% of total employment in 2024, creates an uneven playing field that disadvantages formal MSMEs and limits their access to capital and technology (OECD, 2025[11]). With only 2.6% of MSMEs engaged in goods exporting and information and communication technology services exports at just 0.7% of GDP, the sector’s international orientation remains weak (INSTAT, 2026[18]).

Demographic developments, which are already altering the business environment for SMEs, add urgency to addressing these structural constraints. The working-age population has contracted by 18% since 2011, and fewer than 57% of Albanians are now of working age; firms across the WBT region rank labour shortages as the single most prevalent obstacle to doing business (RCC, 2024[21]). The resulting tightening is visible in the 54% surge in job vacancies recorded in 2023, even as employers report that finding adequately skilled workers remains their primary constraint. Access to finance compounds the challenge: 74% of Albanian firms are required to provide collateral for loans – well above EU norms – while venture capital volumes are negligible and the domestic bond market remains inactive, leaving most MSMEs reliant on retained earnings for investment. At the same time, several developments offer tangible opportunities for upgrading: Albania’s advancing EU accession process and the Reform and Growth Facility provide an institutional anchor for reform; the economy outperforms the EU average in the OECD’s greening cluster, an advantage that could position enterprises favourably in the green transition; and sustained macroeconomic stability, including a positive primary fiscal balance, supports enterprise confidence (OECD, 2025[11]). The window for capitalising on these advantages is narrowing as demographic pressures intensify. The assessment that follows examines the extent to which the policy framework is positioned to convert these structural opportunities into tangible enterprise-level outcomes.

References

[12] Bank of Albania (2026), End of month foreign currencies exchange rates from year 2002.

[1] European Commission (2003), Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, Official Journal of the European Union, L 124, 20 May, Brussels, https://eur-lex.europa.eu/eli/reco/2003/361/oj/eng.

[20] Eurostat (2026), Harmonised Index of Consumer Prices (HICP) (database), https://ec.europa.eu/eurostat/web/hicp.

[9] Eurostat (2026), National accounts (database), https://ec.europa.eu/eurostat/web/national-accounts/database.

[15] Eurostat (2026), Structural Business Statistics (SBS) (database), https://ec.europa.eu/eurostat/web/structural-business-statistics.

[8] Eurostat (2025), International trade in goods, trade by enterprise characteristics, https://ec.europa.eu/eurostat/web/international-trade-in-goods/database (accessed on 5 February 2026).

[7] Eurostat (2024), Structural business statistics, https://ec.europa.eu/eurostat/web/structural-business-statistics/database (accessed on 5 February 2026).

[2] Government of Albania (2022), Law No. 43/2022 on the Development of Micro, Small and Medium Enterprises.

[13] INSTAT (2026), Employment and unemployment from LFS, https://www.instat.gov.al/en/themes/labour-market-and-education/employment-and-unemployment-from-lfs/#tab2.

[18] INSTAT (2026), External trade by economic activity and employment size, https://www.instat.gov.al/en/themes/international-trade/international-trade-in-goods/#tab2.

[16] INSTAT (2025), Foreign trade in goods, https://www.instat.gov.al/en/themes/international-trade/international-trade-in-goods/ (accessed on 5 February 2026).

[17] INSTAT (2025), Statistics on the demographic events of enterprises, 2021-2023, Institute of Statistics.

[14] INSTAT (2025), Structural Business Statistics, https://www.instat.gov.al/en/themes/industry-trade-and-services/structural-business-statistics/#tab2 (accessed on 5 February 2026).

[6] INSTAT (2024), External trade by economic activity and employment size class by economic activity, size By number of employed, export/Import, type and year, https://databaza.instat.gov.al:8083/pxweb/en/DST/START__FT__FTE/NewFTE001/ (accessed on 5 February 2026).

[5] INSTAT (2024), Statistics on the demographic events of enterprises, https://www.instat.gov.al/en/themes/industry-trade-and-services/statistics-on-the-demographic-events-of-enterprises/ (accessed on 5 February 2026).

[3] INSTAT (2024), Structural Business Statistics, https://www.instat.gov.al/en/themes/industry-trade-and-services/structural-business-statistics/#tab2 (accessed on 5 February 2026).

[4] INSTAT (2023), Statistics on small and medium enterprises, https://www.instat.gov.al/en/themes/industry-trade-and-services/structural-business-statistics/publication/2025/statistics-on-small-and-medium-enterprises-2023/ (accessed on 5 February 2026).

[19] INSTAT (2023), Statistics on small and medium enterprises, https://www.instat.gov.al/en/themes/industry-trade-and-services/structural-business-statistics/publication/2025/statistics-on-small-and-medium-enterprises-2023/ (accessed on 5 February 2026).

[11] OECD (2025), Economic Convergence Scoreboard for the Western Balkans 2025, OECD Publishing, Paris, https://doi.org/10.1787/bc0babf3-en.

[21] RCC (2024), Balkan Barometer, https://www.rcc.int/balkanbarometer/publications.

[10] World Bank (2025), Western Balkans Regular Economic Report No. 28, Fall 2025: Towards Better Jobs, World Bank, https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099100625100539134.