EU investments in Albania reach €6 billion but lag behind neighbors

Dec 10, 2024 - By the end of 2023, Albania had drawn nearly €6 billion in foreign direct investments (FDI) from European Union countries, according to Eurostat. The figure includes €457 million invested in Albania last year alone. However, the country trails its neighbors in attracting EU investments relative to its economy's size.

Regional comparison reveals gaps

While Albania has made progress, North Macedonia leads the region, with EU investments accounting for 29.3% of its GDP in 2023. Serbia ranks second, and Montenegro follows closely behind. Albania's 26% share leaves it ahead of only Bosnia and Herzegovina, which has faced challenges due to political instability.

North Macedonia’s streamlined tax system, free economic zones, and business-friendly policies have positioned it as a preferred destination for investors. Companies like Johnson Controls, which explored entering Albania, opted instead for North Macedonia.

Global trends in EU investment

Globally, the EU's foreign direct investment dropped by 4.1% in 2023, totaling €9.16 trillion. The United States remained the top destination, drawing 26.6% of the EU’s investment stock. Other key markets included the United Kingdom, Switzerland, and emerging economies such as Brazil and Singapore.

A growing opportunity

Albania’s government has signaled its intent to improve the business climate to attract more investments. Analysts note that greater policy reforms could help Albania compete more effectively in the region.