The World Bank has slightly revised down its economic growth forecast for Albania, lowering it to 3.4% for 2026 from the previously projected 3.5%. The reduction is only 0.1 percentage points, but it signals a further slowdown of the Albanian economy in a more challenging regional and international environment. For Albania, this would be the lowest growth rate in the past five years. According to the World Bank’s earlier projections, the economy grew by 4.8% in 2022, 4% in 2023, 4% in 2024, and is estimated to have grown by 3.9% in 2025, while the forecast for 2026 has now been lowered to 3.4%.
In its latest April 2026 report titled "Industrial Policies," the World Bank expects the six Western Balkan countries to average growth of 3.1% in 2026 and 2027, supported by stronger exports and public investments, including infrastructure projects funded by the European Union. However, this is not enough to prevent a slowdown in consumption, as wage growth is expected to moderate, investments are likely to weaken due to the cooling of the tourism-related construction boom, and foreign direct investment inflows are projected to be more subdued.
Kosovo leads the economic growth expectations for 2026 at 3.7%, followed by Albania. Montenegro and North Macedonia are each expected to grow by 2.9%, Serbia by 2.7%, and Bosnia and Herzegovina last at 2.5%.
Another risk comes from inflation. The impact on energy prices, linked to the Iran war, is expected to fuel inflation in the region, hitting lower-income groups harder, slowing real wage growth, and delaying the pace of poverty reduction.
The report delivers three main messages. First, the Western Balkans is expected to continue growing, but at moderate rates, far from a strong economic acceleration. Second, the main support will come from service exports, particularly tourism and information technology, as well as public investments, while consumption is expected to cool due to slower wage growth, the fading tourism-related construction boom, and weaker foreign direct investment inflows. Third, rising energy prices, linked to the war with Iran, are seen as a direct risk to inflation, especially for lower-income households, as they reduce real wage growth and slow poverty reduction.
The report also emphasizes that countries in the region, all aiming for EU membership, should better utilize industrial policies and the green transition to strengthen energy security and align their economies with European energy market standards. This is a signal that future growth cannot rely indefinitely on consumption, construction, or tourism but requires a broader productive base and greater economic diversification.
According to the report, the resilience of European and Central Asian countries is being tested again by the Middle East crisis and rising energy import prices. Economic growth in the region is expected to slow to an average of 2.2% in 2026–2027, down from 2.6% in 2025. In the Russian Federation, economic expansion is expected to moderate due to more limited fiscal support and structural constraints. In Turkey, economic growth is projected to fall to 2.8% this year due to higher energy and food prices, before accelerating again to 3.7% in 2027.
Risks to the outlook remain significant. A more prolonged and intense conflict in the Middle East could severely disrupt global energy supply, driving up prices of oil, natural gas, and chemical fertilizers, while leading to weaker economic growth and higher inflation. Similarly, growth in the Eurozone could weaken, especially if global trade tensions escalate.