Gent Sejko: Launch of the EBRD Transition Report 2025-26

Why It Matters

Demographic headwinds threaten long‑term growth and limit monetary policy tools across Emerging Europe, making proactive structural reforms essential for sustainable prosperity.

Key Takeaways

• Albania's population fell to 2.4 million, average age 43.
• Ageing and emigration pressure labour markets and public finances.
• Monetary easing anchored inflation but limits policy space.
• Report urges pension, labour, migration reforms, AI adoption.
• Demographic trends could push real interest rates lower.

Pulse Analysis

Demographic dynamics have moved from a peripheral academic topic to a central macro‑economic concern, a shift underscored by the EBRD Transition Report 2025‑26. The publication frames population ageing, declining birth rates, and migration flows as structural forces reshaping productivity, consumption patterns, and fiscal balances across the region. By quantifying the scale of these trends, the report equips policymakers with a framework to anticipate long‑term growth trajectories and to design interventions that mitigate adverse spillovers. This broader perspective is especially relevant as many emerging economies confront the same demographic inflection points that have already reshaped Europe’s economic landscape.

Albania exemplifies the report’s warnings. The latest census records a 33 percent population decline since 1990, with the median age approaching 43 years. Persistent out‑migration of young workers compounds labour shortages, driving up participation rates but also wage pressures that threaten price stability. The Bank of Albania’s accommodative stance since mid‑2024 has successfully anchored inflation expectations and bolstered credit growth, yet the demographic squeeze is eroding the central bank’s conventional policy levers. Lower real interest rates and constrained monetary stimulus highlight the need for structural solutions beyond short‑term liquidity measures.

The implications extend beyond Albania, signaling a regional imperative for coordinated reform. Policymakers must modernise pension schemes, enhance labour‑market flexibility, and craft realistic migration strategies that retain talent while supporting demographic balance. Simultaneously, embracing technologies such as artificial intelligence can offset productivity gaps, provided adoption is inclusive and responsibly regulated. By treating demography as a policy lever rather than an immutable fate, governments can safeguard growth, protect fiscal health, and ensure that younger generations retain a decisive voice in shaping economic futures.