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Agriculture and industry in long recession, with declines even in 2025

2026-03-27 07:16:00, Ekonomi CNA

2025 was the fifth year that the agricultural sector recorded a decline in production, indicating that the mainstay of our economy has fallen into a long recession, likely with no signs of recovery.

The same trend is also seen in the industry, which closed the second year with a decline in 2025 and is continuing its contraction this year due to the poor performance of exports in the first two months.

According to official INSTAT data, agriculture decreased by 1.95% last year, while industry decreased by -3.15%.

This trend shows that the economic model is shifting from manufacturing sectors to services, mainly tourism. Experts consider this shift of the economy to a sector like that dangerous, as the service sector is not sustainable and depends on tourist flows.

Domestic or external events such as the pandemic can reduce tourism flows, causing colossal damage. In 2020, countries that were based on tourism services suffered a strong economic decline, unlike others that had a manufacturing-based economy. After the pandemic, Spain, Italy and Greece reformed their models by shifting to other sectors, to reduce risks.

In fact, tourism was expected to provide a stronger boost to the agricultural sector with the idea that increased consumption should increase domestic production, but this has not happened, as foreign trade data show that tourism-related imports, including food, have increased sharply with the arrival of tourists.

The continuing decline of the agricultural sector, which remained in negative territory in 2025, reflects a deep cost and labor crisis. The increase in the prices of agricultural inputs, such as chemical fertilizers and oil, has reduced the profitability of small farmers, while government subsidies are very low and EU funds from iPARD remain blocked. Furthermore, the emptying of rural areas by emigration has created an acute labor shortage, causing large areas of land to remain fallow. This sector, which accounted for 20% of the economy before the pandemic, accounted for only 15% in 2024.

The industrial sector is also facing a storm. The extractive industry has been affected by fluctuations in mineral prices on international markets, while the processing industry (fabrication and food production) is being hit hard by the strengthening of the local currency. The depreciation of the euro has made Albanian exports more expensive and less competitive abroad, reducing orders and total production. This decline reflects a weakness in the economic model based on cheap labor, which is losing its advantage.

On the other hand, the growth of the construction sector (4.52%) and the double-digit growth of public administration and healthcare (14.29% in 2025) indicate that capital is shifting towards real estate assets and public spending. Construction is fueled by domestic and foreign investment flows, often concentrated in tourism and urban areas, creating an economy that consumes more than it produces. This economic shift is happening at the expense of material production, making the country more dependent on imports for basic needs.

The Exporters Association is expected to hold a meeting today on the topic "DRAMATIC SITUATION OF THE CLOTHING AND FOOTWEAR MANUFACTURING SECTOR AND INSTITUTIONAL INACTIVITY". This meeting, according to the ProEksport association, is taking place at a critical moment, where the sector is facing a clear and continuous deterioration of the economic situation. For months, businesses have been giving direct and repeated signals. For months, these signals have been ignored, says the Association./ Monitor Magazine