The data from the Central Bank of Montenegro (CBCG) showing a 63% drop in net foreign direct investments in January, from EUR 58.7 million to EUR 21.8 million compared to the previous year, is concerning according to analyst Davor Dokić, though he is not surprised by it.
“It is concerning because it is one of the ways to balance the deficit we face at every turn, so this is not good. However, we are partly to blame for this, as we excluded the Russian market by imposing sanctions, and we have not found an alternative. So, this result doesn’t surprise me,” Dokić said in an interview for RTCG.
Following a decline in tourism revenues and an increase in the trade deficit last year, Dokić sees the drop in investments as the third factor indicating a slowdown in economic activity. He believes that the government’s expectations for a 4.8% GDP growth this year are unrealistic.
“In my opinion, GDP has no chance of growing by more than 3% this year, but let’s wait and see. Unless there’s another inflationary shock and we create artificial GDP growth based on higher prices. The government’s main task should be to create an environment that attracts foreign direct investments, to attract serious investors, and to get Montenegro out of its stagnation,” Dokić added.
He also pointed out that tourism is the only sector in Montenegro that is functioning well.
The Investment Agency acknowledges the poor data for January but stresses that conclusions should not be drawn based on the first month of the year alone.
According to Snežana Đurović, the director of the Agency, foreign investments are also influenced by the stable political environment, which was established last year. She expects the investment data to improve by the end of the year, and the GDP growth projections to be realized.
She reminded that last year they organized a regional conference on public-private partnerships, with guests from Greece, where they initiated the process of identifying potential projects and partnerships. They expect benefits from this initiative.
“In this regard, we received over 50 potential projects that we are currently evaluating for possible realization in the short term. We plan to create a list of at least 10 to 15 of these projects to focus on going forward,” said Đurović.
Of the EUR 56.3 million in total investments in January, more than half was directed toward real estate.
“These investments hold significant share. However, they do not necessarily have a negative impact on the economy, especially through the growth of the construction sector, the increase in tourist business and residential capacities, and increased consumption related to real estate purchases,” Đurović explained.
The largest number of foreign investors came from Turkey, followed by Serbia and Cyprus. According to Đurović, among the top 10 countries investing the most in Montenegro are the USA, Germany, Switzerland, and the UAE, with an increasing number of companies from the EU.
“In the near future, we expect, for example, an acquisition with Hypo Bank, with the company Agri Europe Cyprus, as well as the establishment of a new bank, Zerem Bank. We also have new investments on the horizon, with negotiations advancing with the renowned company Lidl,” Đurović announced.
She also mentioned that several large and recognizable companies from the USA are interested in investing in sectors such as energy, transportation, defense, and cybersecurity.
