Montenegro Economic Outlook

July 2, 2019

Growth fell to a near three-year low in the first quarter of the year on the back of notably more moderate government consumption. Particularly, spending on the Bar-Boljare highway has tapered as construction nears completion. Moreover, growth in exports of goods and services weakened, despite a healthy tourism sector. On the upside, household spending surged, while fixed investment recovered somewhat from near flat growth in Q4 2018, but remained underwhelming overall. Turning to Q2, data suggests growth likely remained subdued. Tourist arrivals rose at a solid pace in April and May but softened from March’s surge, while retail sales slowed and industrial production continued its marked decline in the same months.

Montenegro Economic Growth

The economy is expected to lose steam this year. Fiscal consolidation efforts will likely keep public spending in the doldrums, while the investment impetus from the Bar-Boljare motorway seen in 2018 is expected to fade. A slowdown in the Euro area, which could dampen tourism and demand for Montenegrin goods, is the principal risk to the outlook. FocusEconomics panelists expect GDP to expand 3.1% in 2019, which is unchanged from last month’s forecast, and 2.8% in 2020.

Montenegro Economy Data

	2013	2014	2015	2016	2017
Population (million)	0.6	0.6	0.6	0.6	0.6
GDP per capita (USD)	7,191	7,386	6,521	7,023	7,784
GDP per capita (EUR)	5,415	5,559	5,875	6,347	6,889
GDP (USD bn)	4.5	4.6	4.1	4.4	4.9
GDP (EUR bn)	3.4	3.5	3.7	4.0	4.3
Economic Growth (GDP, annual variation in %)	3.5	1.8	3.4	2.9	4.7
Industrial Production (annual variation in %)	10.6	-11.4	7.9	-4.4	-4.2
Unemployment Rate	19.5	18.1	17.9	17.5	17.0
Fiscal Balance (% of GDP)	-6.0	-3.0	-8.0	-3.4	-5.5
Public Debt (% of GDP)	55.2	59.9	66.2	64.4	64.2
Inflation Rate (CPI, annual variation in %, eop)	0.3	-0.3	1.4	1.0	1.9
Exchange Rate (vs USD)	1.38	1.21	1.09	1.05	-
Exchange Rate (vs USD, aop)	1.33	1.33	1.11	1.11	-
Current Account (% of GDP)	-14.5	-15.2	-13.2	-18.1	-18.6
Current Account Balance (EUR bn)	-0.4	-0.4	-0.4	-0.6	-0.7
Trade Balance (EUR billion)	-1.3	-1.4	-1.5	-1.7	-1.9
Imports (EUR billion)	1.7	1.7	1.8	2.0	2.2
Exports (annual variation in %)	2.1	-9.8	-7.6	6.4	8.8
Imports (annual variation in %)	-2.7	0.6	3.5	11.9	11.7
International Reserves (EUR)	0.4	0.5	0.7	0.8	0.9
International Reserves (USD)	0.6	0.7	0.7	0.8	1.1
External Debt (% of GDP)	68.5	57.3	65.6	62.0	64.6

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Montenegro Facts

	Value	Change	Date
Exchange Rate	1.13	0.65 %	Jul 11

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