At the invitation of representatives of the World Bank (WB), representatives of UBCG attended on April 11, 2024. at the presentation of the regular economic report for the countries of the Western Balkans. As stated in the report, economic activity after the pandemic was an average of 8.5 percent in the period 2021-2023, while growth of 3.4 percent is expected in Montenegro this year, and 2.8 percent in the next. As stated in the report, the new EU Growth Plan for the Western Balkans provides an opportunity to stimulate economic growth through reforms and investments, especially in the green economy. It is stated that the growth of the domestic economy, like last year, will continue to be conditioned by large personal consumption, export of services, public investments, with a smaller impact of investments in tourism and energy. It is emphasized that the fiscal space is limited, but that growth could also be affected by large public investments, as well as a potential concession for airports.
Projections show that inflation should drop to 3.9 percent this year, and to 2.5 percent next year. Geopolitical instability stands out among the risks, which could moderate the growth plans expected by Montenegro’s trading partners. , and the risk is expensive external financing that is necessary for the state. It is also expected that the fiscal deficit will widen until 2027, due to higher social and capital spending. It is also added that Montenegro will have large financial needs for debt repayment, and that in periods when there are large requirements for spending money. That is why fiscal and public debt management policies are necessary, along with structural reforms, in order to increase development opportunities.
Rising wages increase pressure on inflation. Inflation has eased significantly as it has come from a high base since last year, when it reached two-decade highs. Now we see that the domestic pressures on inflation that come through wage increases and production costs are persistently high, pointed out Lakićević, and stated that inflation is no longer driven by food and energy prices, but by clothing prices. footwear, housing… Lakićević added that non-performing loans in Montenegro are still at the highest level in comparison to the region and that in December 2023 they amounted to 5.9 percent. He stated that the public debt has decreased, but also that there is a vulnerability, because in the next two years, earlier significant debts will come due.
