The European Bank for Reconstruction and Development (EBRD) has maintained its forecast for Montenegro’s economic growth this year at 2.9%, according to its latest report. For the following year, the EBRD predicts a growth rate of 3%.
The EBRD revised its estimate for Montenegro’s economic growth in the previous year downward, from 3.8% (as projected in September) to 3.1%. In a dedicated section of the report focusing on Montenegro, the EBRD stated that GDP growth in the previous year was lower than expected in September.
“The slowdown in strong growth from 2022 and 2023 reflects a significant deceleration in tourism following a record-breaking season in 2023. Growth last year was driven by private consumption and gross fixed capital investments, supported by expansive fiscal policies and increases in wages and pensions,” the EBRD noted.
However, net exports declined, partly due to a significant drop in tourism growth after the record year of 2023, as the number of tourists and immigrants from Russia and Ukraine decreased.
Inflation has significantly eased from its peak of 17.5% in November 2022 to 2.1% in December of the previous year.
“GDP growth is expected to slow further to 2.9% this year and 3% next year, as higher prices in the tourism sector could limit demand, while the reconstruction of the Pljevlja thermal power plant will significantly increase electricity imports. On the other hand, rising wages could support robust consumption growth,” the report concludes.
