Montenegro Economic Outlook
The pace of year-on-year GDP growth remained largely stable in Q4 2022; faster increases in government consumption, fixed investment and exports were broadly offset by a softer expansion in household spending. Data for the first quarter of this year paints a mixed picture of the economy. Tourist arrivals were significantly higher than in the same period of the previous year. Moreover, industrial production rose nearly 10% in year-on-year terms in the quarter. Additionally, the unemployment rate averaged lower in Q1 than in the previous quarter, while inflation declined. That said, import and export growth cooled year on year, which translated into a wider trade gap compared to the same period in 2022.
Inflation declined to 10.5% in March from 15.1% in February, marking the lowest reading since March 2022. Softer increases in prices for transport, food and non-alcoholic beverages and housing and utilities drove the reading. This year, inflation should decline from 2022, although it will remain elevated due to protracted pass-through effects from higher production costs.