Foreign investors in Albania continue to experience growth in profits, marking a significant milestone for the country’s economy. Data from the Bank of Albania reveal that foreign investors' earnings reached €275 million in the third quarter of 2024, a 5.8% increase compared to the same period last year, Monitor reports.
 |
This amount reflects both distributed and reinvested profits by foreign investors operating in Albania.
For the first nine months of 2024, earnings amounted to €830 million, up 15% compared to the same period in 2023, setting a historic record for a nine-month period.
Conversely, inbound income flows from Albanian investments abroad also saw growth during the same period, reaching €234 million—a remarkable 68% increase compared to the previous year.
However, the net income balance from investments remained broadly negative, at €596 million, with the deficit rising slightly by 2.4% year-on-year.
Given that foreign investments in Albania far outweigh Albanian investments abroad, the net balance of income from investments has historically been negative.
Economic Recovery and Exchange Rate Impact
The rapid post-pandemic economic recovery has positively impacted foreign companies operating in Albania, resulting in higher profits.
A significant portion of this growth can be attributed to the strengthening of the Albanian lek against the euro. During the first nine months of 2024, the average exchange rate between the euro and lek was 8% lower than in the same period in 2023.
Foreign companies generally generate revenue in lek but distribute profits to shareholders in foreign currencies. The strengthening of the lek has translated the same amount of local currency into a higher value in foreign currency, primarily in euros.
Consequently, foreign investors have been among the beneficiaries of the euro's decline against the lek in the exchange market.
Reinvested Profits Drive Foreign Investments
A substantial portion of these profits is not distributed but reinvested, which has indirectly boosted foreign investments in recent years.
Reinvested profits have become the dominant component of foreign direct investment (FDI) in Albania. In the first nine months of 2024, reinvested profits by foreign enterprises reached €628 million, an 8.8% increase compared to the same period last year. These profits accounted for 54% of the total FDI value during the nine-month period.
This trend underscores the growing importance of reinvested earnings in sustaining and expanding foreign investment activity in Albania, further contributing to the country's economic resilience and development.