More certain estimates of developments in the third quarter will be possible after the publication of most of the short-term indicators by the end of November
The growth of the Montenegrin economy in the third quarter is currently not possible to assess more precisely, because there are not many published indicators, the Center for Economic and European Studies (CEES) announced, adding that it is therefore not possible to give a more certain assessment of this year’s growth.
“More certain estimates of developments in the third quarter will be possible after the publication of most of the short-term indicators by the end of November.” Based on that assessment, it will be possible to make a very reliable estimate of growth for the entire year”, CEES representatives told the Mina-business agency.
“First, industrial production stagnated in July and August. Good results from the tourism industry are expected, although a slightly weaker start of the main season and bad weather in September may affect the reduction of expected tourist revenues for the whole year”, said CEES.
As they stated, it is possible to expect a decrease in real household consumption compared to the first half of the year, due to a decrease in disposable income due to high inflation, while state consumption and investments would stagnate.
Export and import of goods and services would also have significantly lower rates compared to the first half of the year.
“All this would somewhat reduce growth rates in the second half of this year at the level of the growth estimates of the International Monetary Fund and the World Bank.” “We believe that the assessment of the European Bank for Reconstruction and Development on the growth of the Montenegrin economy for this year is less realistic”, said CEES.
CEES commented on the growth estimates of the Montenegrin economy for this and the next year, which were recently published by the IMF, World Bank and EBRD.
When it comes to this year, in the latest October forecasts, the IMF increased the growth estimate of the Montenegrin economy to 7.2 percent, and the SB to 6.9 percent. The EBRD maintained the growth projection of the Montenegrin economy for this year at 3.7 percent.
“The estimate of the real growth of the Montenegrin gross domestic product of 7.2 percent, given by the IMF, is based on the achievement of growth in the first half of the year of 10.3 percent and the estimate that our economy will grow by 5.1 percent in the second half of the year”, they said from CEES.
As they said, the World Bank estimated growth in the second half of the year at 4.6 percent, and at the level of the year at 6.9 percent, while the EBRD’s estimate for the entire year is based on the fall in real GDP in the second half of the year from 0,8 percent.
“The EBRD estimate for this year and the projections for the next year, however, do not include data on GDP growth for the second quarter of this year, because the EBRD report was published a little earlier,” CEES added.
CEES, starting from the data on the growth of the economy in the first half of this year, published in early October its estimates of the range of real growth of Montenegrin GDP for this year between 5.4 and 6.5 percent, which implies growth in the second half of the year from two to four percent.
When asked whether the forecasts should be taken with a grain of salt, given that the crisis caused by the war in Ukraine and the still-present pandemic is intensifying, the CEES answered that the uncertainty, when it comes to the projections for the next year, in addition to the above two factors result and others.
“High inflation caused by the increase in food and energy prices and the decrease in disposable income, as well as the increase in the interest rates of the world’s major central banks and thus the increase in borrowing rates, will affect developments in the coming year.” These are factors that can lead to significant difficulties in the refinancing of the Montenegrin debt and the execution of the budget, both in this year and in the following years”, CEES warned.
As they explained, increased interest rates affect all sectors of the economy through difficult borrowing and difficulties in repaying debt with variable interest rates.
“This is particularly worrisome when we know that budget financing needs in the next year amount to around nine percent of GDP. Therefore, bearing in mind the numerous uncertainties at the global level and the unfavorable fiscal situation in Montenegro, it is necessary to conduct a more prudent fiscal policy in our country, which will lead to a reduction of the public debt in combination with structural policies that support economic growth,” said CEES representatives. – a.
They concluded that the projections of the IMF, the World Bank and the EBRD on the growth of the Montenegrin economy in the coming years were made in a slightly more optimistic basic scenario, with a high risk that the growth of the economy could be significantly lower.
CEES, which is based in Podgorica, is a non-governmental, non-profit, independent organization, dedicated to the improvement of public policy in the process of European integration for sustainable, inclusive, green and resilient socio-economic development and achieving the goals of sustainable development of Montenegro and the Western Balkans, Dan writes.