Montenegro expects average real GDP growth of 3.1 per cent annually between 2026 and 2029, supported by public and private investment, domestic consumption and progress towards European Union membership, according to the government’s latest Macroeconomic and Fiscal Policy Guidelines. The government forecasts real GDP growth of 3.1 per cent in 2026, 3.0 per cent in 2027, 3.2 per cent in 2028 and 3.1 per cent in 2029. Over the four-year period, the projections imply an increase in real economic output of approximately 13 per cent.
The growth scenario assumes continued tourism expansion, stronger implementation of infrastructure projects, resilient foreign investment and fiscal measures that allow public investment to continue while reducing debt ratios and inflation. Montenegro’s economy grew 2.7 per cent in 2025, slowing from 3.2 per cent in 2024. The weaker performance was linked partly to lower tourism activity and the temporary shutdown of the Pljevlja thermal power plant for environmental reconstruction. Reduced domestic electricity generation increased the need for imports, while net exports continued to weigh negatively on GDP.
International institutions maintain slightly more cautious forecasts. The International Monetary Fund and the European Commission project growth of approximately 2.8 per cent in 2026, while the European Bank for Reconstruction and Development and the World Bank estimate growth at around 2.9 per cent.
Inflation forecast points to gradual easing
The government expects inflation to decline from 3.3 per cent in 2026 to 2.0 per cent in both 2028 and 2029, resulting in an average inflation rate of around 2.4 per cent over the planning period. Lower inflation would reduce pressure on household budgets and support purchasing power, while also helping Montenegro move closer to euro-area price stability standards.
Montenegro uses the euro unilaterally but is not part of the eurozone or the European Central Bank’s monetary framework. The inflation outlook remains exposed to external factors, particularly imported energy and food prices. Changes in electricity generation, hydrological conditions, the availability of the Pljevlja plant and regional power prices can affect domestic costs.
Household income supports consumption growth
The government’s projections rely partly on continued domestic demand growth. The average net monthly wage reached €1,012, while the government estimates that real wages increased by approximately 40 per cent over five years. Registered unemployment declined to 7.84 per cent in May 2026, the lowest level since Montenegro restored independence.
Employment growth and higher household incomes are expected to support consumption, although Montenegro continues to rely increasingly on foreign workers in tourism, construction, retail and hospitality. The government also reported that GDP per capita has almost doubled over the past five years. The increase reflects nominal growth, inflation effects, wage developments and the low comparison base created by the pandemic-related tourism downturn.
Revenue growth and expenditure controls shape fiscal outlook
The fiscal framework projects public revenue rising from €3.577 billion in 2026 to €3.989 billion in 2029. Revenue is expected to increase from 41.6 per cent of GDP to 42.4 per cent, indicating expectations that tax receipts and social contributions will grow slightly faster than economic output. The projections imply nominal GDP of approximately €8.60 billion in 2026 and €9.41 billion in 2029.
State expenditure is forecast at €3.158 billion in 2026, equal to 36.8 per cent of GDP, increasing to €3.417 billion by 2029. As a share of GDP, expenditure is expected to decline to 34.8 per cent. The government expects the current budget balance to remain positive throughout the forecast period. The current surplus is projected to increase from €110.1 million, or 1.3 per cent of GDP, in 2026, to €214.9 million, or 2.2 per cent of GDP, in 2029.
Deficit remains above 3% of GDP threshold
The general government deficit is expected to decline gradually from 3.7 per cent of GDP in 2026 to 3.2 per cent in 2029. In nominal terms, the deficit is projected at approximately €318 million in 2026 and around €301 million in 2029. The primary deficit, excluding interest payments, is forecast to improve from 1.7 per cent of GDP to 0.6 per cent during the same period. The government expects infrastructure-related borrowing to remain a key factor in fiscal management, with the economic impact depending on the implementation and productivity effects of financed projects.
Public debt expected to decline after temporary increase
Montenegro expects public debt to rise temporarily to 68.0 per cent of GDP in 2026, mainly due to pre-financing a €750 million Eurobond maturing in 2027 and creating a fiscal reserve. The pre-financing operation is intended to reduce refinancing risks by ensuring that the government is not dependent on market access at the maturity date. Gross public debt is projected to decline from 68.0 per cent of GDP in 2026 to 59.9 per cent by the end of 2029, slightly below Montenegro’s 60 per cent fiscal-responsibility threshold.
Net public debt is forecast at 56.4 per cent of GDP in 2029. Based on projected GDP levels, gross debt would amount to approximately €5.85 billion in 2026 and around €5.64 billion in 2029. Approximately 99.7 per cent of public debt is denominated in euros, limiting direct currency risk.
Infrastructure investment remains central to growth strategy
Public investment is expected to remain a major contributor to economic expansion, with priorities including road infrastructure, healthcare, energy, electricity transmission, environmental systems, airports and municipal infrastructure linked to EU standards. Projects involving the Bar–Boljare motorway, the Adriatic–Ionian corridor, electricity grid upgrades and investments by EPCG and CGES are expected to support construction activity and increase productive capacity.
EU accession funds and the Western Balkans Growth Plan are expected to reduce the amount of investment financed entirely through public borrowing. The cancelled concession process for Podgorica and Tivat airports remains a challenge for the investment outlook. The concession had been expected to attract around €300 million in private capital expenditure, but the process ended after the preferred bidder withdrew and the government assessed the remaining offer as inadequate. Airport modernisation will therefore need to rely on Aerodromi Crne Gore’s own resources, borrowing, development-bank financing or a future partnership model.
Energy projects offer investment opportunities
Energy development remains another important element of Montenegro’s medium-term strategy. The country’s renewable potential includes wind, solar, hydropower and storage projects, supported by its electricity connection to Italy through the undersea cable.
Projects involving EPCG, CGES, Masdar and private renewable developers are expected to contribute to future investment and electricity exports. The development pace will depend on grid capacity, permitting procedures, environmental requirements and transmission investment.
Tourism remains key source of growth and revenue
Tourism is expected to remain a major contributor to foreign-currency earnings, employment and government revenue. The medium-term strategy assumes stronger tourism revenues through higher-value services, longer seasons and increased visitor spending rather than relying only on higher arrival numbers.
Tourism-related construction and real estate continue to represent significant parts of foreign direct investment, leaving the economy exposed to changes in external demand and property-market conditions. Montenegro’s medium-term projections are based on maintaining growth while reducing debt, preserving current-budget surpluses and directing spending towards infrastructure and productive investment.
