Albania needs 20 years to be classified in the group of high-income countries

Albania will need approximately 20 years to move to the classification as a high-income country, the World Bank's spring report for the ECA region, which includes 11 developing countries from Central Asia and Eastern Europe, said.

Data from the World Bank indicate that per capita income in Albania reached approximately 8,500 USD in 2023, but it will take approximately two decades to cross the threshold of 14,000 USD, which classifies countries as high-income. Meanwhile, to achieve the living standards that the EU has today, it will take more than half a century, according to other projections from the EBRD.

The World Bank divides economies into four income groups (low, lower-middle, upper-middle, and high) for several reasons directly related to its development mandate. Albania is currently classified in the upper-middle income group, which is made up of countries with per capita incomes between $4,500 and $14,000 per capita per year, according to the Bank's revised thresholds last year.

The latest report shows that countries in the Europe and Central Asia (ECA) region are facing serious challenges on the path to achieving high-income country status, a goal that seems increasingly distant for many of them.

Countries like Montenegro, Bosnia and Herzegovina, and Serbia are closer to this goal, with projections going up to about 10–18 years for classification in the group of highest-income countries. For Albania, this threshold is about 20 years, while for North Macedonia it takes a few years longer.

For the vast majority of ECA countries, including Georgia, Kyrgyzstan, Uzbekistan, and Armenia, this threshold is seen as unattainable in less than 80–100 years.

The analysis shows that all ECA subregions, with the exception of Turkey and parts of Central Asia, show negative deviations from pre-pandemic projections to reach this threshold. The Western Balkans and Central Europe have been hit hardest, with per capita incomes falling significantly compared to 2019 projections. Turkey is a positive exception, exceeding projections by around 10% compared to 2019.

Structural constraints, the consequences of the pandemic, and sub-potential growth are factors that are affecting the ability of these countries to advance economically. The Bank suggests new development policies, investments in human capital, and acceleration of economic and technological integration in the region.

This year, three countries - Bulgaria, Palau and Russia - moved from the upper middle-income category to the high-income category.

Bulgaria has steadily approached the high-income threshold with modest growth throughout the post-pandemic recovery period, which continued into 2023 as real GDP grew by 1.8%.

Economic activity in Russia was impacted by a large increase in military activity in recent years and a rebound in trade, the financial sector, and construction.

The Palau Islands   also continued its post-pandemic recovery as GDP returned to previous levels, achieving high-income country classification./ Monitor