Sejko: Demographic shifts challenge Albania's long-term growth
Gent Sejko, Governor of the Bank of Albania, emphasized demographic change as a fundamental force reshaping economies at the launch of the EBRD Transition Report 2025-26. He noted that these shifts pose significant challenges for Albania's long-term growth and monetary policy.
Albania's demographic pyramid reverses
Governor Sejko highlighted that the world is at a global demographic turning point, with fewer people entering the labor force and more depending on social systems.
Albania mirrors these trends, facing rapid aging combined with significant outflows of young and working-aged people.
The 2023 census recorded about 2.4 million inhabitants, roughly one third fewer than in 1990, with the average age reaching nearly 43 years.
Emigration, once seen as a mitigating factor for unemployment, is now a structural challenge.
These shifts affect aggregate demand and supply, altering consumption patterns, weakening innovation and productivity, raising production costs, and ultimately influencing prices, investment, and productive capacity.
The Bank of Albania has been concerned about these adverse effects on the labor market, wages, inflation dynamics, and long-run growth potential for almost a decade, as repeatedly emphasized in its reports and analyses.
Resilience and policy challenges
The Albanian economy has shown strong adaptability and resilience, supported by low inflation, sustained economic growth, and rising employment and wages.
The Bank of Albania's prudent monetary policy, focused on price stability, has been instrumental, with an accommodative stance since mid-2024 helping to anchor inflation expectations and improve financial conditions.
However, persistent negative demographic trends are expected to put downward pressure on real interest rates, limiting the effectiveness of conventional monetary policy.
These shifts also complicate inflation dynamics, as increased labor market participation comes at the cost of higher wages.
Governor Sejko emphasized that policy responses require coordinated action and political will, including reforms in pension systems, labor markets, and migration frameworks.