Montenegro’s tourism sector, which accounts for nearly 30% of its gross national income, is closely tied to economic developments in Europe. According to Branimir Jovanović from the Vienna Institute for International Economic Studies (WiiW), a 0.5% slowdown in Europe’s economy could translate to a 0.9% decline in Montenegro’s economic growth.
Impact of inflation and trade disputes
The current trade conflict, triggered by increased U.S. tariffs, is contributing to fears of inflation across Europe. This may lead to Europeans cutting back on spending, including travel. Since one-third of Montenegro’s tourists come from the EU, any economic weakening there directly impacts tourist arrivals and expenditures.
Tourism revenue at risk
Jovanović warns that the economic slowdown in Europe could be even more severe than current projections. However, he also sees potential positive developments that could soften the blow for Montenegro’s tourism industry.
Opportunities amid challenges
One possibility is an economic improvement in Russia, potentially supported by reduced sanctions. This could bring more Russian tourists to Montenegro. Additionally, economic uncertainty may prompt Europeans to favor closer destinations like Montenegro over long-haul trips to places such as Thailand or the Maldives.
U.S. tourists and exchange rate concerns
A weaker dollar may also impact tourism. If the U.S. dollar continues to fall, European trips become more expensive for Americans, potentially reducing the number of visitors from the U.S., who currently make up around 2% of Montenegro’s tourists.
Effects on the current and future seasons
Experts believe the current economic climate is unlikely to affect already-booked vacations for this season. However, a prolonged downturn could influence off-season travel and bookings for the next year.
Domestic policies pose bigger threat
Tourism professionals in Montenegro express more concern over domestic policy decisions than global economic issues. A sharp increase in VAT—from 7% to 15%—and rising entrance fees and tourist taxes are seen as significant burdens. Many contracts with tour operators were signed before the tax hike, leaving companies with reduced profit margins.
Tourism revenue declines for the first time since independence
In 2024, Montenegro experienced a 3.6% drop in tourism revenue compared to the previous year, marking the first decline since independence in 2006, excluding the pandemic year of 2020.
Tourism remains resilient
Despite the challenges, experts like Croatia’s Veljko Ostojić believe tourism will remain strong. Travel has become a way of life for Europeans, and even in times of economic stress, demand is expected to persist—although without room for price increases if demand weakens.
