Construction is becoming one of the more important downside risks in Montenegro’s 2026 forecast. Monstat’s first-quarter data show the value of completed construction works at 87.4 compared with the fourth quarter of 2025, while effective hours worked on construction sites stood at 94.1. That combination points to softer momentum in both value and activity.
This matters because construction is not just a sector. In Montenegro, it is linked to tourism real estate, residential demand, foreign buyers, infrastructure, municipal development, bank lending, employment and imports of materials. When construction slows, the impact spreads through cement, steel, transport, engineering, design, retail and local government revenues.
The 2026 forecast should not assume a construction collapse. Public infrastructure, coastal development, hotel upgrades and residential projects can still support activity. But the first-quarter signal suggests that construction is unlikely to deliver the kind of broad acceleration that would push GDP materially above 3%. Instead, it may become more selective: stronger in premium coastal and infrastructure-linked projects, weaker in speculative or financing-sensitive segments.
Higher financing costs remain part of the story. Even with the euro as legal tender, Montenegro’s real estate and construction market is affected by European interest-rate conditions, bank risk appetite, sovereign spreads and buyer affordability. A project that looked attractive under cheap financing may look less attractive when debt service, materials and labour costs all rise.
The forecast range for construction in 2026 is therefore wide. The base case is a mild recovery after the weak first quarter, with full-year activity roughly flat to slightly positive. The upside case requires faster public works execution, stronger tourism-linked real estate demand and improved permitting. The downside case is another year of contraction in completed works if private investors delay projects and banks tighten lending standards.
The fiscal dimension is also important. The European Commission has warned of a higher-debt environment across Europe and pressure from fiscal deficits, while Montenegro’s own forecast has been lowered to 2.8% for 2026.That limits how much public investment can compensate for weak private construction without raising debt concerns.
Construction will still be visible across Montenegro in 2026, especially on the coast and around infrastructure corridors. But visibility is not the same as broad-based sector strength. The data suggest a market moving from volume expansion to project selectivity. For the GDP forecast, that means construction is more likely to stabilise growth than accelerate it.
