Albania has achieved high economic growth and has enjoyed macroeconomic stability over the past few years and average real Gross Domestic Product (GDP) growth rates of approximately six percent – the highest in South-eastern Europe – underpinned by rising exports (albeit from a low base), and continuing improvements in productivity. Maintaining this performance will be increasingly difficult; Albania will need to increase public, private and foreign investment. Above all, it will need to build human and physical capital, and improve governance structures to maintain its impressive progress to date. Despite GDP per capita reaching an estimated US$3,912 (2008), poverty, high unemployment, and wide regional disparities remain daunting challenges.
Institutional capacity at both central and local levels remain among key challenges. Albania has begun to decentralize government functions, but the pace of devolution has been slower than expected due to political constraints and limited capacity at the municipal and local Government levels. Nonetheless, the decentralization process holds great promise to improve the delivery of services to the poorest Albanians, especially in health, education and water supply.
The Stabilisation and Association process (SAp) with the European Union (EU) is very important to Albania. Eventual membership in the EU remains an overarching national goal; the signing of the Stabilisation and Association Agreement with the EU in June 2006 has been one of the important achievements in this direction.
Albania has begun to implement a new Integrated Planning System (IPS) in an ambitious effort to streamline its policy development processes and integrate numerous planning frameworks such as the National Strategy for Development and Integration (NSDI), the SAp, the Millennium Development Goals (MDGs), and the NATO Partnership for Peace. The IPS will align government decision-making behind a coherent and coordinated long-term vision, ensuring investment decisions are made within the framework of the Medium-Term Budgeting Process (MTBP). The IPS also provides a framework for government consolidation and monitoring of international assistance.