Montenegro is expected to achieve an economic growth rate of 3% this year, primarily driven by private consumption and investments, according to the World Bank (WB).
“After the pandemic, Montenegro experienced strong growth, which slowed to 3% last year, but it is expected to remain at this level in 2025, amid global uncertainties,” states the WB’s regular economic report for the Western Balkans, released today.
Although the temporary shutdown of the Pljevlja coal-fired power plant will increase electricity imports, higher real net wages, credit growth, and solid labor market performance are expected to sustain the country’s economic momentum.
The report highlights a significant decline in inflation, from 8.6% in 2023 to 3.4% last year, and a further decrease is predicted to 2.9% this year and 2.3% in the next year.
“However, this year, the current account deficit is expected to rise to 18.5%, mainly due to increased energy imports. It is expected that just over one-third of the deficit will be financed by net foreign direct investments, with the rest covered by new borrowing,” the report adds.
Poverty is projected to decline to 7.5% by 2027. Most of the poor are long-term unemployed, students, or those not in the labor market, especially in the northern regions. The fight against poverty will require targeted policy interventions, along with continued economic growth.
Projections indicate an increase in the fiscal deficit to about 4% of GDP this year, followed by gradual reduction to 3.6% by 2027.
“The public debt is expected to reach approximately 65.8% of GDP by 2027. Ensuring debt sustainability will require fiscal discipline, especially considering the significant financial needs in the 2025-2027 period and the still-high costs of external borrowing. Additional fiscal consolidation measures would further strengthen Montenegro’s fiscal position,” the report states.
Christopher Sheldon, the World Bank’s office director for Bosnia and Herzegovina and Montenegro, stated that Montenegro’s economy has shown resilience and steady growth over the past four years, but increasing global uncertainties now complicate the growth outlook and present new challenges.
“Maintaining fiscal discipline and making progress in key structural reforms remains crucial for ensuring long-term, inclusive, and sustainable growth,” Sheldon said.
The WB also noted that economic growth in the Western Balkans is expected to moderate this year due to weaker external demand and the economic uncertainty arising from the ongoing development of global trade policies.
“This could negatively affect business and consumer confidence,” the report states, according to Mina Business.
The WB forecasts that the total economic growth rate for Albania, Bosnia and Herzegovina, Montenegro, Kosovo, North Macedonia, and Serbia will reach 3.2% this year, 0.5 percentage points lower than previous projections. Growth is expected to accelerate to 3.5% next year.
Xiaoqing Yu, the World Bank’s director for the Western Balkans, commented that there are some positive economic trends in the region that indicate its resilience and could support solid growth. Lower inflation and wage growth are stimulating consumption, and public investments are beginning to rise.
“On the other hand, we are witnessing increased domestic uncertainty in several Western Balkan economies. Slower economic activity in the European Union and deepening global trade uncertainties could also negatively affect growth prospects in this region,” Yu said.
Global trade uncertainties are likely to affect the Western Balkans, primarily due to slowed economic activity in the eurozone, which could reduce trade in goods and services, as well as inflows of investments and remittances.
The report emphasizes that during periods of uncertainty, diversifying sources of growth and renewing structural reform programs are the most effective strategies to maintain economic resilience. Key measures include removing barriers to labor market access, including those that affect women, deepening regional economic integration, improving governance standards, and increasing market competition to boost productivity and support long-term growth.
In the Western Balkans, faster implementation of EU accession reforms, such as joining the Single Euro Payments Area (SEPA) and introducing “green lanes” to simplify cross-border trade, could further enhance business confidence, attract investments, and stimulate job creation.
