Despite consistent increases in wages, particularly in the public sector, Albanians are finding it increasingly difficult to maintain their standard of living. The rising cost of goods and services, often comparable to or exceeding European prices, is eroding purchasing power and making daily life more expensive.
Eurostat's recently published indicators for 2023 reveal that Albania continues to trail behind Europe in terms of income and individual consumption per capita. Kosovo's data remains unavailable, but Albania is positioned at the bottom of the rankings for both metrics.
A Decline in Purchasing Power
In the indicator of Actual Individual Consumption (AIC), which measures the purchasing power for goods and services, Albania ranks last in Europe, achieving only 41% of the European Union average. This marks a decline from the previously reported 42% in mid-2023, underscoring a decrease in real purchasing power. Albania had the same AIC level of 41% in 2022, but now lags behind Bosnia and Herzegovina, which stands at 42%.
Within the Western Balkans, Montenegro leads with an AIC of 64%, followed by Serbia at 55% and North Macedonia at 49%. While these countries have seen slight improvements, Albania remains stagnant, reflecting broader economic challenges.
Lowest Income Levels in Europe
In terms of income per capita, Albania again ranks last, with incomes reaching just 36% of the EU average, equal to Bosnia and Herzegovina. Other Balkan nations fare better, with North Macedonia at 41%, Serbia at 49%, and Montenegro leading the region at 51%.
Rising Prices Amid Regional Disparities
Albanian prices are increasingly aligning with European levels. In 2023, prices in Albania were 58% of the EU average, up from 54% in 2021, making them the second-highest in the Western Balkans after Serbia (59%). In contrast, prices in North Macedonia are significantly lower, at just 48.7% of the EU average.
A Growth Story That Doesn’t Translate to Prosperity
Albania's economic growth, primarily driven by construction, real estate, and tourism, has not translated into improved well-being for its citizens. In 2023, the economy expanded by 3.4%, a slowdown from the 4.86% growth recorded in 2022. Nearly half of this growth stemmed from construction and real estate, which grew by 9.7% and 11.3%, respectively.
Despite this economic activity, the benefits have not trickled down to the average Albanian. The gap between wages and living costs continues to widen, leaving Albanians among the poorest in Europe.
The Bigger Picture
Eurostat emphasizes that while GDP per capita is a crucial economic indicator, AIC offers a more accurate reflection of consumer well-being across different countries. For Albania, the stagnant AIC and rising prices highlight the disconnect between macroeconomic growth and the quality of life for ordinary citizens.
Addressing this disparity requires policy interventions that go beyond construction-driven growth, focusing instead on sustainable economic strategies and measures to boost real purchasing power. Until such changes occur, Albanians will continue to face the harsh reality of being among the poorest in Europe, despite living in an increasingly expensive country.
