The Illusion of Economic Growth: How Exchange Rates and Inflation Hide the Truth of GDP Per Capita in Albania

Has Albania become richer or is the lek simply stronger?

This is the question at the heart of an analysis that breaks down the government’s optimistic figures for the growth of Gross Domestic Product (GDP) per capita over the past decade. From 3,552 euros per capita in 2013 to over 10,000 euros in 2024 — it sounds like an extraordinary success. The government has missed no opportunity to loudly proclaim this phenomenal achievement of tripling GDP per capita with colorful graphics. But is it really so?

In an official news release from 2019 (link attached), the public is informed that: Per capita income from 2013 to 2019 increased by 27.2%. So if we believe the government's optimistic figures from 2019 to 2024, GDP per capita has increased by 272.8%. It is probably not necessary to point out that if GDP per capita has tripled, then in the period 2019-2024 per capita income has increased 10 times more than in the period 2013-2019. An economic miracle has happened!

A deeper look at the data shows a more cautious picture, where behind the impressive growth lie two main factors that distort the perception of success: the strengthening of the lek against the euro (which requires a separate study) and accumulated inflation.

Stronger Lek, Weaker Euro: An Increase on Paper

In 2013, one euro was worth about 140 lekë. In 2024, this figure has fallen to less than 99 lekë. This depreciation of the euro, against a lek that has strengthened by over 30% during the period, has automatically increased the value of every indicator expressed in euros — including GDP per capita. So, Albania has not necessarily produced more, but simply what it produces now translates into more euros.

If we were to hold the 2013 exchange rate constant, the growth in GDP per capita in euros would be much more modest: from 3,552 euros to about 7,051 euros — that is, about 98% and not 183% as claimed with the current exchange rate.

Inflation: The Invisible Enemy of Real Growth

From 2013 to 2024, prices have increased significantly — an average of about 3.5% per year, with inflationary explosions after 2022. In total, accumulated inflation is estimated at about 40%, which means that the purchasing power of one lek in 2024 is much lower compared to 2013.

When the 2024 GDP per capita is calculated using 2013 lek, the result drops significantly: about 705,091 lek, from 987,128 lek nominally. So, the real growth is only +41.8% in 11 years — far from the growth declared in euros.

Same story with wages: more euros, but not necessarily more bread

The increase in the average salary is another case study that shows the illusion of progress. From 52,080 lekë in 2013 to 98,300 lekë in 2024, it sounds like a significant improvement. Expressed in euros, the increase seems dramatic: from €372 to €1,000. But when calculated in 2013 lekë, it drops to just 70,214 lekë – a real increase of 34.8%, much lower than they try to portray on the surface.

Conclusion: Inflated figures hide modest reality

Economic growth in Albania exists — but it is nowhere near what is described by the figures stated in nominal euros. When we remove the effect of the exchange rate and inflation, a simpler, more modest, but also more reliable truth emerges: real GDP growth per capita during 2013-2024 is around 41.8%, but by no means over 180% as the current government wants to inflate for electoral propaganda.

Recommendation: Time for economic honesty

At a time when perception is everything, it is important that statistics do not turn into propaganda. Institutions should report in the official currency lek, provide realistic analysis of data, and clarify the impact of inflation and exchange rates. Telling the truth in economics is not a weakness — it is a necessity to build trust with citizens./ Vna.al