Gross Domestic Product is being sustained only by the increase in salaries in public administration, while the main sectors that generate real growth and employment are declining or stagnating, in a signal that the economy is at a crossroads.
INSTAT announced that the Gross Domestic Product (GDP), in real terms, in the second quarter of 2025 is estimated to have grown by 3,51%, compared to the second quarter of 2024. This is the lowest growth rate since the last quarter of 2023.
The main impact was provided by "Public Administration, Education and Health" with +1,65 percentage points, contributing to almost half of the economic growth.
For Public Administration, Education and Health, salaries and social contributions of employees account for the main part of the contribution to GDP. Other elements are Expenditure on goods and services (intermediate consumption, such as energy, supplies, school or medical materials; Depreciation of equipment, buildings, etc., is calculated as part of value added.
At the end of the second quarter of 2025, the average gross salary in public administration was 99,525 lek, with an increase of about 15.8% on an annual basis.
Despite the country becoming a favorite tourist destination, the activity of "Trade, Transport, Accommodation and Food Services" has impacted the economy by +0,47 percentage points.
Also having a weak impact are "Real estate activities" with +0,37 percentage points and "Construction" with +0,30 percentage points, both sectors that until a year were making the main contribution to the economy.
Agriculture and industry, two important contributors to employment, have a negative effect. The activity “Agriculture, Forestry and Fishing” contributed with -0,46 percentage points and “Industry, Energy and Water” contributed with -0,18 percentage points.
The impact of other sectors according to INSTAT on economic growth is: "Professional Activities and Administrative Services" with +0,27 percentage points, "Information and Communication" with +0,11 percentage points, "Arts, Entertainment and Recreation; Other Service Activities" with +0,08 percentage points, and "Financial and Insurance Activities" with +0,03 percentage points.
“Net Taxes on Products” contributed positively with +0,87 percentage points.
Stronger growth, administration and real estate
The performance of the main economic activities for the second quarter of 2025, compared to the second quarter of 2024, is presented as follows:
“Public Administration, Education and Health” marked an increase of 15,11%, followed by the activity “Real Estate” with an increase of 7,86%. The group “Information and Communication” marked an increase of 5,38%, the group of activities “Arts, entertainment and recreation and other service activities” marked an increase of 5,07%, the group “Professional activities and administrative services” marked an increase of 3,88%.
The group “Trade, Transport, Accommodation and Food Services” recorded an increase of 2,72%, the activity of “Construction” recorded an increase of 2,68% and the group “Financial and Insurance Activities” recorded an increase of 1,96%. The activity group “Agriculture, Forestry and Fishing” recorded a decrease of 2,49% and “Industry, Energy and Water” decreased by 1,79%. Net Taxes on Products increased by 6,53%.
Even consumption is kept afloat by the state
The main components of GDP by the expenditure approach, for the second quarter of 2025, compared to the second quarter of 2024, are presented as follows, according to INSTAT:
– The final consumption of the population increased in real terms by 3,88%;
– Government final consumption increased by 12,44%;
– The component of gross fixed capital formation increased by 4,33%;
– Exports of goods and services increased by 0,97% and Imports of goods and services increased by 3,26%./Retrieved from Monitor
