Montenegro’s economy is projected to grow by 3.5% next year, an increase of 0.7 percentage points from previous forecasts, according to the latest report from the World Bank (WB).
In the new Regular Economic Report for the Western Balkans, released today, the WB states that Montenegro’s economy will grow by 3.4% this year, matching the spring forecast.
For 2026, a growth rate of 3.2% is anticipated, which is 0.2 percentage points higher than earlier projections.
The report highlights that economic growth in the Western Balkans is expected to moderately accelerate this year, primarily due to increased consumption and investment driven by rising purchasing power.
The WB predicts that the overall economic growth in Albania, Bosnia and Herzegovina, Montenegro, Kosovo, North Macedonia and Serbia will reach 3.7% next year, an increase of 0.2 percentage points from the spring edition of this report.
The expected growth rate for this year is 3.3%, which is 0.1 percentage points higher than initially estimated.
Isolina Rossi, an economist at the WB and the report’s lead author, stated that domestic factors continue to support a moderate acceleration of growth in the Western Balkans. She also noted that the gradual recovery of economic activity in the European Union will play a crucial role in boosting exports from this region.
Despite these positive outlooks, the region remains sensitive to various risks, including slowed global growth, renewed inflation, political uncertainty, and extreme weather events.
As economic growth strengthens, the living standards in the Western Balkans are gradually approaching those enjoyed by citizens of more advanced EU economies. However, to maintain this growth momentum and accelerate convergence, structural reforms are necessary, including those outlined in the EU Growth Plan.
Xiaoqing Yu, the WB director for the region, emphasized that economic integration is a key driver of growth for smaller economies like those in the Western Balkans. To enhance this growth, these countries should improve trade relations both within the region and with the EU, reduce waiting times at border crossings, and integrate their payment systems. Additionally, addressing demographic challenges and labor market issues requires a strong focus on developing human capital.
Improving education and healthcare systems is crucial for transitioning from a middle-income to a higher-income economy. With nearly a quarter of citizens in the Western Balkans currently living abroad, better management of the global workforce from this region could be a significant driver of economic development. While emigration poses challenges such as labor shortages, it also presents clear opportunities for economic benefits.
The report notes that, with adequate management, migration can reduce poverty, boost exports, and attract investment, ultimately leading to job creation and knowledge transfer. For example, remittances can improve the financial situation of migrant households. Additionally, the return of migrants who have gained advanced skills abroad can lead to a “brain gain” for their home countries, while attractive wages in foreign countries may motivate those who stay to pursue education and skill development.
The report recommends that Western Balkan countries adopt several public policies to maximize the benefits of migration, such as developing skills training and mobility programs in partnership with destination countries, and expanding bilateral social security agreements.
It also suggests enhancing protections for migrants throughout their migration cycle to mitigate risks and encourage their return. Recommendations include facilitating the transfer of capital, expertise, and advanced technologies through the diaspora, as well as using digital tools and improving data collection for effective migration management and policy adoption.
