According to the report of the World Bank (WB), Montenegro will record GDP growth of 6.9% this year, the best in the region, which was stimulated by a good tourist season, but also by the growth of domestic consumption caused by the increase in the nominal income of the population. At the same time, as a result of global events and the war in Ukraine, there was double-digit inflation in almost all of Europe, but some countries, such as Armenia, managed to increase their GDP, as did Montenegro.
Since the start of the war, many Russians have come to Armenia, boosting the IT workforce by almost 25 percent, pushing the country’s GDP to an unexpected 13 percent. The first projection of the local central bank was a growth of 1.6%. Predictions are that this will strengthen the Armenian economy in the long run due to the large influx of young and educated people. Also, 229 computer companies from Russia and 104 from Ukraine arrived in Montenegro, which puts our country in the leading position in the region in terms of the number of newly opened companies from that sector.
Economic analyst Oleg Filipović states that Montenegro could hardly count on similar success at the moment, at least when it comes to this sector, but that there is room for improvement.
– Large companies that imposed sanctions on Russia transferred representative offices, employees and capital to neighboring countries, which led to an increase in the demand for personnel in those countries, especially in the IT sector, i.e. the areas of hardware, software or cyber-security, which are led to GDP growth. However, Montenegro, as a small market, in which there are no representative offices of serious companies from this sector, could hardly count on similar success at this moment – emphasizes Filipović.
Filipović states that in most cases these companies are located in Belgrade, and they give subcontracts, like dealerships, so our country is not interesting as a small market.
– The IT market in our country can develop, but if we cannot bring large companies through the market, then we can through tax policy. Therefore, reduce taxes and attract them to open their representative offices and thus increase their own capital profit, and, on the other hand, develop the domestic market through investments because we have good developers, invest in their licensing, as well as work on private-public partnerships between domestic and foreign companies – says Filipović.
He also says that one should not be tied to a specific market, because the goal is not just a one-time transfer of capital, which can lead to disruptions in the market.
– Russians and Ukrainians are more powerful in terms of payment and the domicile population cannot compete with them and is placed in a subordinate position. Montenegro must work on developing those economic branches that will bring benefits to the domestic population, such as finance, IT… The banking market needs to be regulated, because here the banks operate according to a conservative system and they only place money towards the population, even very little money goes to the economy and that through lending, not investments – concluded Filipović.
GDP does not give a realistic picture of progress
Filipović also sees a perspective in the amendment of the Law on Banks, i.e. the direction towards investment banking, as in the EU, which we strive for.
– Developing the capital market and the money market should be imperative, because we have all the institutions, but they do not do their job well enough. It is necessary to attract strong funds through the reduction of taxes. For the money market, the banks should be influenced to lower the interest rate, because that money could be bought on several bases and on several sides, which would lead to an increase in GDP. GDP does not provide real data, I am more for the category of life index used in Western countries, which calculates, quality, income and job satisfaction, expenses, social, health insurance. When we have all that, we can get a realistic picture of how far we are progressing because the GDP does not give a realistic picture – says Filipović, local media writes.
