Conference Paper

The global economy is in the midst of a deep downturn, affecting the real and financial sectors, both in advanced, emerging and developing countries. All major advanced economies are in recession, while activity in emerging and developing economies is slowing abruptly. The fact that the Albania`s economy and financial system still are not completely integrated with the rest of the global economy has provided some buffer from the global financial credit crisis. But, the recent trends of exports and imports show that the crisis has arrived in Albania. This paper analyses the impact of the global financial crisis on Albanian economy, in particular on foreign trade. It provides an overview of thepossible impact of the crisis on the short‐term macroeconomic outlook. The Albania`s economy will mainly be affected by the global economic downturn through a decline in export demand, investment, remittances, and less availability of credit. Export demand might in particular hurt the reexporting industry in shoes and clothing but other sectors will also be affected. Against this background, the paper provides policy recommendations on how best to address the impact of the crisis on Albania`s economy, particularly on foreign trade. As a solution we need to develop e more competitive export sector. On the other hand, this is the best time for local investors and entrepreneurs to exploit opportunities to expand our export sector.