Montenegro’s import gap turns into an investment roadmap for local production and nearshoring

Montenegro’s economy is marked by a persistent mismatch between what it produces and what it consumes. With the current account deficit exceeding 17% of GDP, the country relies on imports to satisfy demand across a broad range of goods and services—an arrangement that is often treated as a vulnerability, but also signals where new investment could build local capacity.

Tourism brings in meaningful foreign exchange, yet it has not been enough to offset the scale of imports. The shortfall is particularly visible in construction materials, energy-related services, food products and industrial inputs. From an investor perspective, each imported item or service represents a potential domestic market that could be served locally if producers can align with cost structures and quality standards.

Reforms aimed at private-sector growth support import substitution

The investment case is reinforced by the reform agenda’s focus on private sector development and competitiveness. By improving the business environment, reducing administrative barriers and enhancing access to finance, Montenegro is working to create conditions under which domestic production can expand—turning import dependence into a more resilient pattern of supply.

Where demand already exists: construction, energy services and food chains

Construction materials provide one of the clearest examples. Ongoing infrastructure and tourism development generate demand for cement, aggregates, prefabricated components and finishing materials, much of which is currently met through imports. Local production—even at modest scale—can capture value by lowering transport costs and improving supply chain reliability.

Energy-related services are another area where imported capacity can be replaced as renewable energy and efficiency projects grow. Demand for installation, maintenance and technical services creates room for domestic providers to reduce reliance on foreign contractors while keeping more value inside the economy.

Food supply chains also matter. Tourism-driven demand for food products, especially in coastal regions, can support local agriculture and processing. The article notes that investments must account for scale limitations and geographic constraints, but targeted projects could substitute imports in specific segments.

Project scale and returns: smaller deals may fit more investors

The sectors highlighted tend to involve project sizes that are relatively modest compared with large infrastructure developments—generally ranging from EUR 5 million to EUR 30 million. That scale is described as accessible to a wider set of investors, including SMEs, regional players and private equity funds.

Return prospects are linked to the import substitution effect: replacing imported goods with local production allows companies to retain margins that would otherwise go to external suppliers. The article states that equity IRR in the 12% to 18% range can be achievable in well-structured projects where demand remains stable and competition is limited.

Nearshoring potential depends on niche manufacturing and logistics readiness

Beyond supplying Montenegro’s internal market, nearshoring offers an additional route. Montenegro’s proximity to EU markets, lower labour costs and improving regulatory alignment create potential for export-oriented production. However, the country is unlikely to develop large-scale manufacturing; instead, competitiveness may concentrate in niche segments such as specialised components or processing and services.

Logistics and connectivity are presented as critical enablers. Efficient transport networks—both within Montenegro and across borders—are necessary for production and distribution. While infrastructure improvements are underway, gaps remain that investors will need to factor into planning.

Key risks: market size constraints and execution capability

The article flags challenges including limited market size, economies of scale hurdles and workforce availability. Investors are advised to assess demand durability, cost structures and operational capabilities carefully. Partnerships—domestic as well as regional—are cited as a way to mitigate some constraints.

The broader message is that Montenegro’s trade imbalance should not be viewed only as a macroeconomic problem. It functions as a map of where imports dominate—and therefore where investment can target segments capable of generating value through domestic production or export-oriented niches. As reforms continue improving the business environment, the opportunity set may widen; the decisive factor will be execution: translating identified potential into sustainable operations that can compete over time.