Montenegro enters autumn with growth running ahead of earlier forecasts, supported by tourism, energy, construction and public spending, but the summer expansion has exposed growing weaknesses in household purchasing power and the structure of the economy.
Real gross domestic product expanded 3.8% year-on-year in the second quarter, accelerating from about 2.6% in the first quarter and raising the prospect that full-year growth could reach around 3.1%-3.4%.
The improvement was broad enough to lift tax receipts, employment and business activity, but it was not equally distributed across the economy.
Tourism delivered another strong summer, electricity generation rebounded sharply and construction remained one of the strongest domestic investment sectors. Public finances also benefited, with budget revenues reaching about €1.72 billion in January-July, nearly 9% higher than a year earlier.
The main weakness is increasingly visible in household incomes.
Average net wages reached around €1,037 in July, but annual wage growth had slowed to little more than 2%, while inflation accelerated to 3.8%.
That suggests real wage growth has turned slightly negative.
The change matters because household consumption has been one of Montenegro’s most reliable sources of growth following several years of large nominal wage increases.
Consumers remain supported by employment, tourism income, remittances and bank credit, but autumn spending is likely to become more sensitive to food, housing, energy and borrowing costs.
The growth mix is also becoming increasingly concentrated.
Industrial output rose strongly, but most of the improvement came from electricity rather than manufacturing. Foreign investment remains heavily exposed to property and tourism. Imports continue to dwarf goods exports.
The economy therefore enters autumn in stronger cyclical condition but with many of its long-standing structural weaknesses intact.
September should retain considerable summer momentum. Tourism activity normally remains significant, construction is active and infrastructure spending should support domestic demand.
A clearer slowdown is likely from October as tourism activity normalises and household purchasing power becomes more important.
That would not represent a downturn.
The more likely scenario is a transition from peak-season growth toward an economy supported increasingly by construction, energy, public investment and credit.
The risk is that those engines remain too concentrated to deliver consistently strong growth.
Montenegro’s economic performance in 2026 consequently looks better than initially expected, but headline GDP alone provides an incomplete picture.
The autumn test will be whether the country can sustain growth above 3% while inflation moderates and investment gradually moves toward sectors capable of expanding productive capacity rather than primarily supporting consumption and property.
