Montenegro Economic Outlook

September 3, 2019

Economic growth likely decelerated in the second quarter. While tourist arrivals still rose at a robust pace in annual terms in Q2, growth slowed compared to Q1. Moreover, industrial production’s recovery in June, which was driven by a sharp rebound in electricity and gas supply, was not strong enough to offset April–May’s plunge, while the merchandise trade deficit widened slightly in the quarter due to a pick-up in imports. That said, increased purchases of machinery and transport equipment bodes well for fixed investment growth in Q2. Also, turning to the third quarter, the recovery in industrial output was sustained in July, and the expected boost in electricity transit from the Montenegro-Italy submarine power cable, which is planned to come onstream later this year, should keep the sector on a more stable footing.

Montenegro Economic Growth

Economic growth will likely cool this year due to slowing construction activity, mainly on the Bar-Boljare highway, and the government’s continued fiscal consolidation efforts. Moreover, weaker growth in the EU will likely weigh on tourism, exports and FDI inflows. Further risks to the outlook include further overrunning on construction costs and persistently high unemployment. 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	1.10	0.65 %	Sep 04

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