Montenegro’s economy is growing, wages are rising and unemployment has fallen to its lowest level since independence. Yet beneath those favourable indicators lies an increasingly uncomfortable imbalance: the country is consuming and importing far more than it produces and exports.
The current-account deficit widened to 20.5% of GDP in 2025, from 17.1% in 2024 and 11.2% in 2023. This means that the external shortfall has grown from roughly one euro in nine of annual output to more than one euro in five in only two years. For a small euroised economy without an independent currency or conventional monetary policy, that is not merely a statistical curiosity. It is one of the clearest measures of the fragility of Montenegro’s growth model.
The immediate causes are easy to identify. Private consumption increased by 5.3% in 2025, supported by higher wages, employment and household borrowing. Gross fixed investment rose by 11%, but much of that investment also required imported machinery, construction materials, equipment and consumer goods. Imports therefore expanded alongside domestic demand, while exports remained concentrated in tourism, electricity and a limited number of low-complexity products.
The imbalance became particularly visible in the final quarter of 2025. Imports of goods and services reached €1.4 billion, while exports amounted to only €617.8 million. The resulting net external deficit of approximately €785 millionwas equivalent to almost 39% of quarterly GDP. Final consumption, meanwhile, represented more than the economy’s total quarterly output, with the difference covered by investment flows, borrowing and external financing.
Tourism is no longer sufficient to offset the import bill. Montenegro received 2.73 million tourists in 2025, an increase of 4.7%, while tourism revenue rose by 1.4% to €1.48 billion. These are substantial numbers for an economy of approximately 600,000 people, but the weak increase in revenue relative to arrivals suggests that volume growth is not translating proportionately into higher value per visitor.
Tourism itself is also import-intensive. Hotels, restaurants, retail businesses and construction projects depend heavily on imported food, beverages, furniture, vehicles, technology and building materials. A successful season consequently raises both service exports and merchandise imports. The net contribution is positive, but smaller than gross tourism revenue would imply.
The first months of 2026 offered little evidence that the structural trade weakness was being reversed. Merchandise exports fell by 15.2% year on year to €127.3 million in the first quarter, while imports remained close to €944.5 million. Lower exports of bauxite, transport equipment and pharmaceutical products outweighed a modest increase in electricity and food exports.
Foreign investment helps finance the gap, but not fully. Montenegro recorded net FDI of €530.7 million in 2025, up 8%, while gross inflows reached €1.02 billion. Yet the EBRD estimates that net FDI finances only around one-third of the current-account deficit. Gross FDI also includes property purchases and intercompany transactions that do not necessarily increase the country’s export capacity.
The composition of investment is therefore as important as the amount. Capital directed towards coastal property may support construction, tax revenue and employment, but it also increases demand for imported materials and may create relatively little recurring export income once construction is completed. Investment in electricity generation, grids, logistics, digital services, agriculture or export-oriented companies has a different economic effect because it can create continuing foreign-currency revenue or reduce the import bill.
Recent data suggest that the financing environment could become less forgiving. During the first four months of 2026, net FDI declined by 7.1%, while gross inflows fell by 26.8%. The deterioration partly reflected higher capital outflows related to repayments of intercompany loans, but it demonstrated how quickly the balance can change.
Montenegro’s use of the euro reduces currency risk and has helped anchor confidence. It also removes the exchange-rate adjustment available to countries with their own currencies. A conventional depreciation could make imports more expensive and exports more competitive. Montenegro instead has to correct imbalances through productivity, wages, fiscal policy and changes in the structure of investment.
The government expects GDP growth of 3.1% in 2026, with domestic demand increasing by 3.2% and contributing 4.1 percentage points to growth. That forecast highlights the dilemma. Consumption and investment can sustain activity, but unless export performance improves, part of that demand will continue leaking abroad through imports.
The answer is not to suppress household living standards. It is to make the supply side capable of supporting them. Montenegro needs more domestic food production, higher-value tourism, renewable electricity, better rail and port logistics, scalable digital companies and businesses capable of entering EU supply chains. Improvements to the Port of Bar, the Bar–Belgrade railway and electricity interconnections could all contribute, but only if accompanied by companies able to use the infrastructure.
The current-account deficit does not imply an immediate crisis. Montenegro still has access to investment, external finance and a credible EU-accession path. But a deficit of 20.5% of GDP leaves little protection against a poor tourism season, higher energy prices, weaker FDI or more expensive sovereign borrowing. The consumption boom has raised incomes. The next stage must ensure that Montenegro produces enough to pay for it.
