Albania’s Economy in Late Spring 2026: Four Readings of a Single Condition

The Economy Desk

Four sets of figures released in late May 2026 look, at first glance, like separate stories: a collapse in the use of government debt as loan collateral, a rebound in bank deposits, a statistical recount of extreme poverty, and a productivity gap measured against working hours. Read together, they describe one economy: liquid at the top, strained at the bottom, and growing in ways that do not reach everyone.

Government securities as collateral: a market drying up
The use of government debt instruments to secure bank loans fell for a second consecutive year in 2025. Figures from the Financial Supervisory Authority (AMF) put the value of government debt securities pledged as collateral at 310 million lekë last year, a drop of 79 percent against the year before. The transaction count tells the same story more sharply: securities were posted as collateral in 41 cases, 89 percent fewer than a year earlier.

The contraction was led by households. Individuals pledged 210 million lekë in government paper, down 84 percent year on year, while businesses pledged 100 million lekë, a 45 percent decline. The trend did not reverse in the new year. In the first quarter of 2026 the value of pledged securities fell below 10 million lekë, 49 percent less than the same period of 2025, across just three transactions.

The instruments involved are mostly bonds, which carry longer maturities; treasury bills feature only rarely. Two commercial banks accounted for most of the activity, Banka Kombëtare Tregtare and Intesa Sanpaolo Bank Albania, with smaller volumes at Credins, OTP Albania, Tirana Bank, and Raiffeisen.

The logic of the instrument has not changed, which makes its decline worth noting even at this small scale. Securities are more liquid and easier to value than the real estate that dominates Albanian collateral, and enforcement on default is faster and cheaper, which normally translates into lower interest rates on the loans they secure. Against those advantages sit two frictions that bankers identify as unresolved: the risk that a security’s market value falls below the outstanding obligation before enforcement, managed through over-collateralization and periodic revaluation with margin calls; and procedural gaps in registering a lien or transfer of ownership in the securities registry at the Bank of Albania, particularly where another bank is the custodian of the pledged paper. The volumes are tiny, a few hundred million lekë against a deposit stock measured in trillions, so this is no constraint on credit in aggregate. It is something smaller and more telling: an instrument with clear advantages that banks use less each year, for reasons that come down to plumbing nobody has finished laying.

Deposits return to growth: savings concentrate at the top
While one channel of household engagement with public debt thinned, household and corporate savings did the opposite. After lek deposits fell in February and March, April marked a reversal. Bank of Albania data put lek deposits of individuals, businesses, and other institutions at 737 billion lekë at the end of April, up 10.7 billion lekë or 1.5 percent on the month, recovering the losses of the previous two months, which had run to 6 billion and 4.3 billion lekë respectively. On an annual basis the lek savings stock grew by 97 billion lekë, or 15 percent.

Foreign-currency deposits continued their gentle climb to 8.8 billion euros, expanding by 35 million euros, the same as the prior month, and by 747 million euros over the year, or 9.3 percent. The total savings stock, lek and euro converted into local currency, stood at 1.5 trillion lekë at the end of April, near the January record of roughly 1.51 trillion (above 15 billion euros).

The single most telling figure is the annual one. Over the twelve months to April 2026, deposits across the banking system, converted to euros, grew by about 1.75 billion euros. The lek did the heavier lifting, contributing roughly 57 percent of that growth through its 97-billion-lek increase, equivalent to around 1 billion euros at prevailing rates, with the euro component supplying the remaining 747 million. Albanians are saving, and the lek share is rising; what the data here cannot settle is how much of that shift reflects preference for the currency rather than exchange-rate effects, rate differentials, or the seasonal rhythm of budget payments.

Extreme poverty: more than 245,000, and a statistical caveat
The same banking system that absorbed 1.75 billion euros in new savings serves a country where more than ten percent of residents struggle to meet daily costs. INSTAT’s Income and Living Conditions Survey, recalibrated against the 2023 census, shows the share of households reporting that they make ends meet “with great difficulty” falling from 18.0 percent in 2021 to 10.2 percent in 2024.

The honest reading of that improvement matters. It did not come from a rising standard of living; it came from recalibrating the data against the new demographic structure of the census. Applied to the revised population, the figure translates to roughly 245,015 individuals in extreme poverty.

The indicator is self-reported, built from citizens’ own perception of their incomes, and what it describes is concrete. Households in this band cannot absorb even a minor unexpected cost, a health emergency or a household breakdown, because they hold no savings at all. They fall repeatedly behind on utility and rent payments and live with the standing threat of disconnection. The deprivation reaches diet and health directly: many cannot afford a full meal with meat or fish every second day, cannot heat their homes adequately through winter, and cannot replace basic appliances such as a washing machine or a working refrigerator. This is a group that cannot ride the country’s general economic growth without targeted support, which is the point the recalibration risks obscuring. A better demographic denominator improved the percentage; it did not feed anyone.

Long hours, low output: the productivity gap
The fourth thread explains why growth and hardship can coexist. Albanian workers put in some of the longest hours in Europe and produce some of the least. INSTAT data, available through 2024, show an Albanian working 41.3 hours a week, down marginally from 41.6 the year before; for salaried employees the total reaches 43.6 hours.

That places Albania squarely in a regional pattern of long hours. Eurostat figures for 2025 put Turkey at the top with 42.8 hours a week, Montenegro second at 42.3 (on 2020 data), then Bosnia and Herzegovina at 40.9 and Serbia at 40.6, with North Macedonia lowest in the region at 39.5; no data exist for Kosovo. The entire region works longer than the European Union, where full- and part-time employees aged 20 to 64 averaged 35.9 hours in their main job in 2025. The longest EU weeks were in Greece (39.6 hours), then Poland and Bulgaria (38.7 each), Lithuania (38.4), and Slovenia (38.3); the shortest were in the Netherlands (31.9), Germany and Denmark (33.9 each), and Austria (34.0).

The hours buy little. An OECD study, as reported by Monitor and yet to be matched against a primary release, put the productivity of Albanian small and medium enterprises at 29 percent of the EU average on 2023 data, with an SME worker producing on average 14,924 euros a year against 52,000 in the EU. The anomaly sits with large firms. An Albanian working in a large enterprise produces 19,645 euros, against 87,000 in the EU, leaving Albania’s large firms at 22.6 percent of the EU average and, against the pattern in almost every developed economy, less productive than the country’s own SMEs. They are also the least productive large firms in the region, behind Serbia (31,400 euros per person), Bosnia and Herzegovina (27,000), and North Macedonia (21,600).

That inversion is the figure that should not be passed over, because everywhere else scale buys efficiency. The likely explanation is compositional rather than mysterious: “large” in the Albanian context often means employment-heavy, low-value-added activity, construction, utilities, call centres, extractive and state-adjacent concerns, rather than the productive industrial and high-margin services that fill the category in the EU. A firm can be large in headcount and thin in output per worker, and a labour market that competes on hours rather than output rewards exactly that. The data here do not prove the explanation; they mark the anomaly clearly enough that any account of Albanian competitiveness has to confront it.

The condition
The four readings resolve into one, though not the tidy one the symmetry tempts. Money is accumulating in the banking system, 1.75 billion euros over the year, and increasingly in lek; whether that reflects genuine confidence in the currency or merely exchange-rate movement, rate differentials, and seasonality, the figures here cannot say, and it is worth not overstating. What the figures can say is that accumulation and hardship are coexisting. More than 245,000 people sit in extreme poverty, entirely outside that growth, and a statistical recount has made their number look smaller without making their lives easier. The collateral market, meanwhile, offers a smaller and more contained lesson: an instrument with clear advantages for banks, falling out of use over procedural frictions nobody has bothered to fix, a reminder that even the plumbing the system already has is left half-finished.

The thread that binds the welfare gap to the growth is productivity, and here the evidence is suggestive rather than proven. Albanians work among the longest hours on the continent and produce among the least, and their large firms, which elsewhere in Europe do the heavy lifting, are the least productive part of the economy. An economy that competes on hours rather than output can grow its deposits and still leave a tenth of its people unable to absorb a broken refrigerator. The savings are accumulating. Whether the economy learns to put them to work, and to reach the people growth has so far passed by, is the question these figures pose and none of them answers.