Montenegro is expanding innovation programmes and institutions, but research and development spending remains 0.3% of GDP and its European Innovation Scoreboard performance is 44.7% of the EU average. A tax credit is designed to bring more private capital into research and innovation.
Browsing: economy of Montenegro
Montenegro is pursuing a proposed 600 MW interconnector with Italy as it seeks to expand electricity exports and attract investment. The country also expects to rely on its Pljevlja coal plant until 2041.
Montenegro’s GDP grew 3.8% in the second quarter of 2026 as the country entered the final stretch of EU accession, but its current-account deficit widened to 20.5% of GDP. The challenge is to make growth more productive, export-oriented and fiscally sustainable.
Montenegro’s current-account deficit widened to 21.1% of GDP by the second quarter of 2026, from 20.5% in 2025. Strong domestic demand and a narrow export base are driving the external gap.
Foreign direct investment inflows rose in 2025, but around half of gross inflows went into real estate. Montenegro’s investment mix leaves scope to attract more capital into export-generating activities.
The European Commission warned that Montenegro’s Euro Model could add pressure to public finances and the external balance. The 2026 deficit is projected at 3.7% of GDP, above the 3% fiscal-rule ceiling.
Montenegro has created a Credit Guarantee Fund with 10 million euros of initial capital as small firms remain reliant on bank credit. A broader financing ladder is needed to help viable businesses grow, invest and export.
Montenegro’s foreign trade expanded in 2025, driven almost entirely by imports. Goods exports fell 6.9%, while imports rose 9.3%.
EU investors accounted for 32.8% of Montenegro’s foreign direct investment inflows in 2025, up from 28.2% in 2024, making the bloc the country’s largest source of foreign investment. The increase comes as Montenegro moves into the final stage of EU accession negotiations.
Montenegro’s banks remained highly profitable in 2025 as a wide gap between lending and deposit rates supported earnings, despite falling returns. European payment integration is advancing, while small and medium-sized enterprises continue to face financing constraints.
