Montenegro Outlook | GDP growth reverted back to historical averages
CEE Macro Outlook , 21. Mai
After three exceptional years when growth averaged close to 9% y/y, expansion slowed to 3% y/y in 2024. Domestic demand largely supported growth, but weaker than expected tourism season pushed the FY GDP figure slightly below expectations.
Outlook suggest growth figures should remain similar in the mid-term, as well as the structure of growth. Another year of projected double-digit growth of net wages, both in nominal and real terms, indicates continuation of supportive consumption pattern. Investments, while slowing, will remain supportive while the biggest uncertainty is once again related to the outcome of the tourist season.
Inflation averaged 3.3% y/y in 2024, falling as low as 1% y/y in September after somewhat surprising deflationary contribution from food prices. Inflation picked up to 2% y/y around year-end and climbed closer to 3% y/y in 1Q25. We expect prices will remain stable in the vicinity of 3% y/y.
Both general budget revenues and expenditures came in largely as planned, shaping a 3.1% of GDP budget gap for the whole year. Full implementation of the Europe now program is likely to keep the budget gap elevated above 3% of GDP in the upcoming period.
Montenegro has made good progress regarding EU accession negotiations. At the end of March, the European Commissioner for Enlargement Marta Kos has stated that Montenegro could finalize EU accession negotiations by 2026 or 2027, while Deputy Prime Minister for Foreign and European Affairs Filip Ivanović said the country is ready to close six to nine chapters by the end of this year.
Outlook suggest growth figures should remain similar in the mid-term, as well as the structure of growth. Another year of projected double-digit growth of net wages, both in nominal and real terms, indicates continuation of supportive consumption pattern. Investments, while slowing, will remain supportive while the biggest uncertainty is once again related to the outcome of the tourist season.
Inflation averaged 3.3% y/y in 2024, falling as low as 1% y/y in September after somewhat surprising deflationary contribution from food prices. Inflation picked up to 2% y/y around year-end and climbed closer to 3% y/y in 1Q25. We expect prices will remain stable in the vicinity of 3% y/y.
Both general budget revenues and expenditures came in largely as planned, shaping a 3.1% of GDP budget gap for the whole year. Full implementation of the Europe now program is likely to keep the budget gap elevated above 3% of GDP in the upcoming period.
Montenegro has made good progress regarding EU accession negotiations. At the end of March, the European Commissioner for Enlargement Marta Kos has stated that Montenegro could finalize EU accession negotiations by 2026 or 2027, while Deputy Prime Minister for Foreign and European Affairs Filip Ivanović said the country is ready to close six to nine chapters by the end of this year.