According to the latest forecasts of the European Bank for Reconstruction and Development (EBRD), the Montenegrin economy will grow by 12.3 percent this year.
Over the summer, the EBRD estimated that Montenegro’s gross domestic product (GDP) growth would be 8.5 per cent, but in the latest situation report, it boosted its outlook by 3.8 per cent.
According to the report on regional economic prospects published today, next year is expected to increase by 5.7 percent in Montenegro. That’s 0.3 percent less than the six percent summer forecast.
“The Montenegrin economy, after one of the worst downturns in the EBRD region last year, has begun to recover strongly. “GDP grew by 19% in the second quarter, driven by a strong recovery in domestic and external demand,” the report said.
The EBRD said that, given the importance of the tourism sector to GDP, the performance of the third quarter will largely determine overall GDP growth. After a slow start, tourism had a strong growing trajectory during the summer, with the number of foreign tourist arrivals and overnight stays in collective accommodation reaching about 85% of 2019 levels.
The report adds that the results are mainly due to visitors from neighboring countries, but that there are tourists coming from more distant destinations.
“Also, the state budget registered a surplus of 105 million euros from June to August,” the EBRD said.
The report notes that retail trade has been on the rise since April, reaching an increase of over 50 per cent in the peak summer months.
The economic sentiment indicator has been positive since May this year.
“The potential for growth stems from the possibility of an even stronger end to the tourist season than expected. “The negative risks are mainly related to the uncertainties associated with the future path of the pandemic and the repeated political instability,” the EBRD warned.
In the Western Balkans region, the EBRD has raised its economic growth forecast to 6.4 percent this year.
“This significant growth review reflects better-than-expected output in the first half of the year and continued growth momentum in the third quarter,” the report said.
When it comes to countries in the region, the EBRD forecasts eight per cent growth in Albania this year, 7.7 per cent in Kosovo, 6.5 per cent in Serbia, 4.5 per cent in Bosnia and Herzegovina and four per cent in northern Macedonia.