Montenegro Economic Outlook
Available figures paint a mixed picture of the economy in Q4 2022, after year-on-year growth slowed markedly in Q3. Merchandise exports expanded at a softer clip in Q4 compared with the previous quarter. Meanwhile, merchandise import growth remained robust. This, coupled with soaring retail sales, points to resilient domestic demand. Data for Q1 is mixed: Industrial production slumped in January, while the unemployment rate ticked down and retail sales expanded strongly. In politics, the country will hold presidential elections on 19 March. Unless one of the candidates gathers more than 50% of the vote, a run-off will be held two weeks later. Although the office of president is largely ceremonial, President Milo Djukanovic has so far rejected the prime ministers proposed by Parliament, creating political deadlock. If Djukanovic is reelected, early parliamentary elections could be called.
Inflation declined to 16.2% in January from 17.2% in December. Softer increases in prices for transport, food and non-alcoholic beverages, clothing and footwear and alcoholic beverages and tobacco drove the reading. This year, inflation should slow notably, but it will remain elevated amid protracted pass-through effects from higher production costs.