Montenegro Economic Outlook

July 3, 2018

The economy started 2018 on solid footing, with growth accelerating from the print recorded at the end of last year. Public and private consumption grew at the slowest pace since Q3 2015, but stellar dynamics for fixed investment—which was up by almost a third year-on-year—still propelled the economy. In addition, the external sector recorded an outstanding performance, with export growth outpacing imports and reaching the highest level in years. Signs are also positive for Q2, with strong growth in industrial production and merchandise exports reported in the January–May period. This solid momentum should help cushion the effects of Montenegro’s fiscal consolidation efforts, prescribed by the IMF to strengthen macroeconomic fundamentals and enable the country to sustainably fund infrastructure projects, such as the Bar-Boljare highway.

Montenegro Economic Growth

Growth should moderate this year and next, as key infrastructure projects near completion and the ongoing fiscal consolidation dampens consumption. Our panelists expect GDP to expand 3.2% in 2018, which is up 0.1 percentage points from last month’s forecast, and 2.7% in 2019.

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	6,520	7,023	7,683
GDP per capita (EUR)	5,415	5,559	5,875	6,347	6,800
GDP (USD bn)	4.5	4.6	4.1	4.4	4.8
GDP (EUR bn)	3.4	3.5	3.7	4.0	4.2
Economic Growth (GDP, annual variation in %)	3.5	1.8	3.4	2.9	4.3
Industrial Production (annual variation in %)	10.7	-10.5	9.2	-3.6	-4.3
Unemployment Rate	19.5	18.0	17.6	17.7	17.0
Fiscal Balance (% of GDP)	-4.8	-1.3	-8.3	-3.5	-5.4
Public Debt (% of GDP)	55.2	59.9	66.2	64.4	65.1
Inflation Rate (CPI, annual variation in %, eop)	0.3	-0.3	1.4	0.9	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	-18.9
Current Account Balance (EUR bn)	-0.5	-0.5	-0.5	-0.7	-0.8
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	-9.0	8.0	7.4
Imports (annual variation in %)	-2.7	0.6	3.2	12.2	11.4
International Reserves (EUR)	0.4	0.5	0.7	0.8	0.9
International Reserves (USD)	0.6	0.7	0.7	0.8	1.0
External Debt (% of GDP)	68.5	57.3	65.6	61.9	-

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Montenegro Facts

	Value	Change	Date
Exchange Rate	1.17	0.65 %	Jul 17

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