Montenegro’s current-account deficit reached 20.9% of GDP in the 12 months to June 2026, up from approximately 18% a year earlier, as imports continued to outpace the foreign revenue generated by exports, tourism and investment.
Net foreign direct investment stood at around 6% of GDP, broadly unchanged from the previous period and covering less than one-third of the external shortfall, according to the European Commission’s latest assessment of the Montenegrin economy.
Trade Deficit Widens as Services Surplus Declines
Montenegro’s merchandise trade deficit amounted to approximately 44.7% of GDP, reflecting the country’s reliance on imported goods. Meanwhile, the services surplus, supported primarily by tourism and transport, declined to around 18.8% of GDP, a decrease of approximately 1.1 percentage points year on year.
Despite the deterioration in external accounts, Montenegro recorded GDP growth of 3.8% year on year in the second quarter of 2026. Gross fixed capital formation rose by 26.5%, while exports of goods and services increased by 2.2%, ending five consecutive quarters of contraction.
Strong investment and household consumption continue to support economic activity but also generate demand for imported machinery, construction materials, equipment and consumer goods. This can widen the current-account deficit before new investments begin producing revenue from foreign markets.
Energy and Tourism Projects Can Increase Future Export Revenue
The pattern is particularly relevant to Montenegro’s expanding energy investment programme. Wind, solar and battery projects require imported turbines, photovoltaic modules, transformers, inverters and control systems during construction. Their contribution to the external balance depends on whether subsequent electricity production displaces imports or generates cross-border export revenue.
Tourism investments follow a similar trajectory. Hotels and resorts often require imported construction materials, furnishings and equipment before generating foreign-currency income from visitors. Residential real estate has a different economic effect: foreign purchases can support capital inflows and construction, but do not automatically expand the country’s capacity to export goods or services.
Investment composition is therefore an important factor in Montenegro’s external financing position. Electricity exports, logistics, manufacturing, technology and higher-value tourism can generate recurring foreign revenue, while property transactions do not necessarily produce the same ongoing contribution.
FDI Covers Less Than One-Third of the External Gap
With net FDI at approximately 6% of GDP against a current-account deficit of 20.9%, Montenegro must finance the remaining gap through other capital flows, borrowing and changes in financial assets. The stability and economic purpose of those inflows are consequently important to the country’s external position.
The European Commission estimated import coverage at roughly three months. Montenegro’s use of the euro means it has neither an independent national currency nor a conventional foreign-exchange reserve framework associated with countries operating their own currencies. External adjustment therefore depends on competitiveness, fiscal policy, investment allocation and stronger export capacity rather than currency depreciation.
For banks and investors, a large current-account deficit does not necessarily signal an immediate crisis. Economies undergoing intensive investment cycles can sustain external deficits when capital inflows remain stable and investment eventually expands productive capacity. Risks increase when financing is volatile or capital is concentrated in assets that generate insufficient future export revenue or income.
Infrastructure and Productive Investment Could Strengthen the Balance
The economic effects of individual investments can differ substantially. A €1.2 billion renewable-energy portfolio capable of exporting electricity would have a different long-term impact on the external balance from an equivalent amount invested predominantly in residential property.
Infrastructure can also improve external competitiveness indirectly. Better roads, railways and facilities at the Port of Bar can reduce logistics costs and strengthen Montenegro’s role in regional trade. Agricultural processing and domestic food production could reduce reliance on imports, while digital and professional services can generate export revenue with relatively limited physical-import requirements.
The current-account deficit provides an indicator of how effectively investment is translating into productive capacity. Although GDP growth and FDI inflows remain substantial, a deficit approaching 21% of GDP shows that domestic demand and investment are generating significantly more external expenditure than the economy earns through exports and services.
As the current investment cycle progresses, the external impact will depend on the performance of new renewable-energy plants, tourism assets, logistics infrastructure and productive companies once they enter operation. Their ability to generate export revenue will influence whether the deficit narrows or remains elevated alongside continued investment inflows.
