Montenegro's economy has continued to grow fast in 2023, driven by private consumption and a good tourism season. A deceleration is projected for 2024-2025 as high inflation and increasing borrowing costs are set to weigh on household consumption and private investment. Weaker external demand is likely to affect tourism. A good fiscal performance in 2023 was supported by high growth of revenue from consumption taxes and one-off items while capital spending remained under-executed. However, the budget deficit is set to widen amid tightening financing conditions and rising interest costs.
Real GDP expanded by 6.6% y-o-y in the first half of 2023, driven by strong private consumption, as a result of increasing real wages, employment and household borrowing, and a very successful tourism season. The rise in exports of goods and services outpaced the growth in imports and added to real GDP growth. Gross fixed capital formation and government consumption expanded moderately. The main headwinds came from high inflation and political uncertainty.
Economic growth is projected to remain strong in 2023, underpinned by private consumption and export of services. In 2024-2025 GDP growth is set to moderate amid headwinds from still elevated inflation, tighter financing conditions, domestic political fragmentation, and weak external demand. These factors are expected to weigh on real disposable income, private consumption, recovery of investment and tourism exports.
The current account deficit is set to narrow in 2023 due to the healthy growth of exports, notwithstanding somewhat lower surpluses of the primary and secondary income balance in line with the slowdown in the EU and lower remittances. The current account deficit is expected to decrease further slightly over 2024-2025 due to lower growth of imports resulting from moderating consumption. The balance of risks is tilted to the downside due to the subdued growth outlook in the main export base makes it vulnerable to fluctuations in international demand, and elevated prices might reduce external demand for tourism services in Montenegro.
Sources:
https://ec.europa.eu/economy_finance/forecasts/2023/autumn/autumn_forecast-2023_me_en.pdf
| 2024. | 2025. | 2026. | 2027. | |
|---|---|---|---|---|
| Money value | 0 | 0 | 0 | 0 |
| Bank savings | 0 | 0 | 0 | 0 |
| Real Estate Investment value | 0 | 0 | 0 | 0 |
The highest inflation was recorded in 2022. In accordance with official data and economic trends, it is predicted that in the coming period inflation in Croatia will have a slight annual decline.
Sources:
The World Bank (2024)
The top exports of Montenegro are Copper Ore (€335M), Electricity (€262M), Raw Aluminium (€237M), Aluminium Ore (€47.2M), and Packaged Medicaments (€43.9M), exporting mostly to South Korea (€321M), Serbia (€159M), Italy (€125M), Switzerland (€116M), and Bosnia and Herzegovina (€95.5M).
Currency: EUR
Values: in .000
Sources:
World Bank (2024)
A slight increase in GDP was recorded, while gross investments are in permanent growth. The consumption of the population is around 58 M Euros.
Currency: EUR
Values: in .000
Sources:
World Bank (2024)
As a result of its analysis in March 2024, the Standard & Poor's agency confirmed Montenegro's B credit rating with a positive outlook. In March 2020, Moody's Investors Service confirmed Montenegro's credit rating of "B1 with a stable outlook".
Sources:
https://tradingeconomics.com/montenegro/rating
Currency: EUR
Sources:
https://monstat.org/cg/
Currency: EUR
Sources:
https://www.monstat.org/
Sources:
https://www.cbcg.me/
Sources:
https://www.cbcg.me/
