Industry and its development are a necessary step to lead a country towards prosperity. But instead of taking the sector to another level of the value chain, Albania is going in the opposite direction, destroying the few industries it has.

Official Eurostat data show that industrial production in Albania has marked a continuous decline after 2021, ranking the country at the bottom of Europe for the performance of this sector during the period 2021-2025.

The industrial production index in Albania dropped to 84.7 points in 2025, from a base of 100 points in 2021. Industrial production in 2025 was 15.3% lower in volume than four years earlier.
Of the 35 European countries included in the data, only Ukraine, whose economy continues to be directly affected by the war, had a weaker result. In Ukraine, industrial production in 2025 was 30.4% below the level in 2021.

In Albania, the index initially increased to 102.9 points in 2022, but then began a rapid contraction, to 94 points in 2023, to 87 points in 2024, and to 84.7 points in 2025. Compared only to 2022, when the highest level of the period was reached, industrial production has decreased by about 17.7%.

Albania’s performance is also significantly weaker compared to other Balkan countries. In 2025, industrial production in Serbia was 8.8% above the 2021 level, while in Turkey growth reached 9.9%. North Macedonia was only 1.4% below the baseline, while Montenegro recorded a decline of 6.5%. In Bosnia and Herzegovina, industrial production was 8.6% lower than in 2021, but even this contraction was significantly smaller than Albania’s 15.3% decline.

Greece and Croatia, two economies in the region where tourism plays a significant role, also managed to expand industrial activity. Greece recorded an increase of 12.7% compared to 2021, while Croatia recorded an increase of 2.3%.
Of the 35 economies included, 19 had higher industrial production in 2025 than in 2021, while 16 recorded a decline.
The largest increase was recorded in Denmark, where industrial production was 28.8% above the 2021 level. It was followed by Ireland with 22.4%, Malta with 16.6%, Greece with 12.7%, Poland with 12.5% ​​and Cyprus with 12.1%.

European industry has been hit hard by rising energy costs, weakening external demand, stronger competition from China and problems in the automotive sector in recent years. These shocks have particularly affected economies with heavy and energy-intensive industries.

In Albania, the industrial slowdown is linked to a combination of problems in the extractive industry, energy production and export-oriented manufacturing. The strengthening of the lek has reduced the revenues of companies selling in euros, while wage and production costs have increased. At the same time, Albanian companies are facing stronger competition from lower-cost producers in Asia. The European Commission estimates that Albania’s manufacturing exports have been hit by the appreciation of the lek, rising labor costs and foreign competition.

The structure of Albanian industry remains concentrated in relatively low value-added sectors, such as textiles and footwear, as well as in commodity-related products, including oil, metals, cement, and energy. This makes production more sensitive to fluctuations in international prices, exchange rates, and weather conditions that affect hydropower production.

Unlike countries that have expanded pharmaceuticals, technology, machinery, or other high-productivity sectors, Albania's economic growth in recent years has relied more on tourism, construction, and real estate. As a result, the economic expansion has not been accompanied by a recovery in industrial production./ Monitor