The European Bank for Reconstruction and Development (EBRD) has lowered its forecast for Montenegro’s economic growth this year to 2.6%, a 0.3% decrease from its previous projection of 2.9% in February.
In its latest report, which was reviewed by Mina-business agency, the EBRD also forecasts a 2.7% growth for Montenegro’s economy next year, again 0.3% lower than the 3% expected in February.
According to the EBRD’s estimates, Montenegro’s economy grew by 3% last year.
The EBRD report highlights that the actual growth of the Gross Domestic Product (GDP) significantly slowed down from 6.3% in 2023 to 3% in 2024, primarily due to a slowdown in tourism following a record season in 2023.
“The growth last year was driven by private consumption and investments, supported by expansionary fiscal policies, wage and pension increases, and ambitious infrastructure projects. However, net exports fell as the influx of tourists and migrants from Russia and Ukraine weakened,” the report states.
The EBRD also noted that inflation significantly decreased from a peak of 17.5% in November 2022 to 1% in September 2024, before rising again to 2.8% in February.
“Real GDP growth is projected at 2.6% this year and 2.7% in the next year. A more moderate growth is expected due to rising prices in the tourism sector, driven by large wage increases, which could limit demand,” the report adds.
Furthermore, the reconstruction of the Pljevlja Thermal Power Plant, which provides around 40% of the country’s electricity, will significantly reduce domestic electricity production and lead to a substantial increase in electricity imports.
“On the other hand, continued wage growth could further stimulate consumption but also widen the trade deficit,” the EBRD noted.
