NewsThe Montenegrin economy is expected to experience a "soft landing"

The Montenegrin economy is expected to experience a “soft landing”

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In Montenegro, a gradual slowdown of economic activity, known as “soft landing,” is expected after the high growth of the gross domestic product (GDP) in the last three years, according to the Center for Economic and European Studies (CEES).

“The impacts of the pandemic and geopolitical events will diminish, and economic growth will stabilize at a lower level. The decline in household consumption last year indicates this slowdown,” said CEES.

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As they stated, additional pressure comes from reduced growth in the European Union (EU), which will affect the Montenegrin economy.

Moderate growth in household consumption and a reduction in government spending are expected this year, along with the stabilization of investments and moderate growth in exports and imports.

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“CEES’s projection based on the basic growth scenario is that, considering previous indicators, there will be stagnation or weak growth in household consumption, a reduction in the rate of growth in government consumption, a calming of investment activity, as well as moderate growth in the export and import of goods and services this year. Such a scenario would produce a real GDP growth rate of 2.8% this year,” CEES forecasted.

Challenges include cost control and securing funds for debt repayment, as well as the need for structural reforms to support green transition and digital transformation and strengthen human capital.

“The reform of state-owned enterprise supervision, supported by the EU and the Montenegrin government, is also crucial for reducing fiscal risks,” CEES believes.

CEES is currently implementing a project called Partnership for Sustainability and Greater Accountability of Public Enterprises, aiming to strengthen the role and participation of the non-governmental sector and citizens in overseeing the work of state-owned enterprises through better monitoring of key financial indicators of their operations and compliance with corporate governance criteria.

The project is supported by the Institute Alternative, funded by EU funds, and co-financed by the Ministry of Public Administration.

Commenting on the last year, CEES stated that the Montenegrin economy recorded growth of around 6.6% in the first three quarters, contributed to by the influx of non-residents, impacting increased consumption in retail, tourism, and construction due to higher demand for housing.

“According to CEES estimates, the overall real economic growth last year ranged between 5.7% and 6.7%, which is more optimistic than the government’s projections published in the Economic Reform Program for the period from now to 2026,” said CEES.

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