Albania’s trade deficit has deepened to -49 billion ALL in November 2025, marking the largest shortfall since August’s -48 billion ALL. This persistent external imbalance reflects structural challenges in export competitiveness and rising import demand. The deficit remains well above the 12-month average of -44 billion ALL, signaling sustained pressure on the country’s external accounts.

Drivers this month

• Import growth outpaced exports by 3.50% MoM, driven by higher energy and machinery purchases.
• Exports contracted 1.20% MoM, weighed down by weaker demand from key European partners.
• Seasonal factors and inventory restocking contributed to elevated import volumes.

Policy pulse

The BoT deficit remains a concern for the Bank of Albania, which has maintained a cautious monetary stance. Inflationary pressures persist, partly fueled by import costs, complicating the central bank’s inflation targeting efforts. The current deficit level suggests limited room for monetary easing without risking further currency depreciation.

Market lens

Immediate reaction: The ALL weakened 0.40% against the EUR in the first hour post-release, reflecting market concerns over external vulnerabilities. Short-term yields on Albanian government bonds rose by 5 basis points, signaling increased risk premia.

Examining core macroeconomic indicators alongside the BoT data provides a fuller picture of Albania’s external and domestic environment. The current account deficit, closely linked to the trade gap, remains elevated at approximately 7.50% of GDP, up from 6.80% a year ago. Inflation stands at 4.30% YoY, above the central bank’s 3% target, partly due to imported inflation.

Monetary Policy & Financial Conditions

The Bank of Albania’s policy rate remains at 4.75%, unchanged since September 2025. Financial conditions have tightened slightly as the central bank signals vigilance against currency pressures. Credit growth slowed to 6% YoY, reflecting cautious lending amid external uncertainties.

Fiscal Policy & Government Budget

Fiscal policy remains moderately expansionary, with the government running a deficit of 3.20% of GDP in Q3 2025. Public investment in infrastructure and energy imports has contributed to higher import bills, indirectly affecting the trade balance. However, efforts to diversify export sectors are underway.

External Shocks & Geopolitical Risks

Global supply chain disruptions and elevated energy prices continue to pressure Albania’s import costs. Additionally, geopolitical tensions in the Balkans and Eastern Europe pose risks to trade routes and investor confidence, potentially exacerbating external imbalances.

Market lens

Immediate reaction: The ALL depreciated sharply post-release, with the EUR/ALL pair rising 0.40%. Albanian sovereign bond yields climbed modestly, reflecting heightened risk perceptions tied to external imbalances.

Looking ahead, Albania’s trade balance trajectory will hinge on several key factors, including global demand, energy prices, and domestic policy responses. The following scenarios outline potential paths:

Bullish Scenario (20% probability)

• Stronger European demand boosts exports by 5% YoY.
• Energy prices stabilize or decline, reducing import costs.
• Government accelerates export diversification and productivity gains.
• Result: BoT deficit narrows to -40 billion ALL by mid-2026.

Base Scenario (55% probability)

• Moderate export growth of 2% YoY, offset by steady import demand.
• Energy prices remain elevated but stable.
• Monetary policy maintains current stance to contain inflation.
• Result: Deficit remains near current levels, fluctuating between -48 and -50 billion ALL.

Bearish Scenario (25% probability)

• Global slowdown reduces export demand by 3% YoY.
• Energy prices spike due to geopolitical tensions.
• Currency depreciation fuels imported inflation and import costs.
• Result: Deficit widens beyond -55 billion ALL, pressuring reserves and growth.

Albania’s November 2025 Balance of Trade data underscores persistent external imbalances that pose challenges for macroeconomic stability. The widening deficit, driven by import growth and sluggish exports, limits monetary policy flexibility and risks currency pressures. Policymakers must balance inflation control with growth support, while accelerating structural reforms to boost export competitiveness. External shocks and geopolitical risks remain key downside threats. Close monitoring of trade dynamics and coordinated fiscal and monetary responses will be critical to navigating these challenges in 2026.

Key Markets Likely to React to Balance of Trade

The Balance of Trade is a crucial indicator for markets sensitive to Albania’s external sector and currency stability. Key tradable symbols historically correlated with BoT shifts include:

• EURALL – The Albanian lek’s exchange rate against the euro is directly impacted by trade deficits and capital flows.
• ALBEX – Albania’s main equity index, sensitive to macroeconomic stability and investor sentiment.
• BTCUSD – Bitcoin often acts as a risk sentiment barometer, reacting to emerging market stress.
• USDEUR – Euro-dollar dynamics influence regional trade and capital flows affecting Albania.
• EURSTOXX50 – European equities reflect broader economic conditions impacting Albania’s trade partners.

Insight: Balance of Trade vs. EURALL Exchange Rate Since 2020

Since 2020, Albania’s Balance of Trade deficit has shown a strong inverse correlation with the EURALL exchange rate. Periods of widening deficits coincide with lek depreciation against the euro, reflecting external pressures on currency stability. For example, the 2023 deficit spike to -52 billion ALL coincided with a 6% lek depreciation. This relationship underscores the importance of external balance in maintaining currency strength and investor confidence.

FAQ

What does the Balance of Trade indicate for Albania’s economy?

The Balance of Trade measures the difference between exports and imports. A deficit, like Albania’s current -49 billion ALL, indicates more imports than exports, signaling external vulnerabilities and potential currency pressures.

How does the Balance of Trade affect monetary policy in Albania?

A widening trade deficit can limit the central bank’s ability to ease monetary policy due to inflation risks and currency depreciation, as seen with the Bank of Albania’s cautious stance amid persistent deficits.

What are the main risks to Albania’s trade balance outlook?

Key risks include global demand shocks, rising energy prices, and geopolitical tensions in the region, all of which could worsen the trade deficit and pressure macroeconomic stability.

Takeaway: Albania’s November 2025 trade deficit signals ongoing external imbalances that require coordinated policy action and structural reforms to safeguard economic stability and growth prospects.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.