The forecast of a 2.9% economic growth for Montenegro in 2025, published by the European Bank for Reconstruction and Development (EBRD), is not good news for Montenegrin citizens, said economic analyst Davor Dokić.
“This is not an optimistic forecast. In fact, it is quite catastrophic, considering that the second section of the Mateševo–Andrijevica highway, a project worth about 600 million EUR, is expected to start this year. Around 100 million EUR is planned for this year, which should result in a growth of at least 3.5%, potentially even approaching 4%,” Dokić explained.
According to him, the situation is worse than portrayed, pointing out that the Ministry of Finance showed a report in January indicating a surplus of two million EUR, while the government still had outstanding obligations of 60 million EUR.
He emphasized that the fact that all European economies have entered into a recession should not be overlooked.
“Germany, as the engine of the European Union, has entered a recession because it moved from cheap Russian gas to more expensive American gas. As soon as input costs in production rose sharply, their products became less competitive in the market. And once the German economy is in recession, the EU is also in recession,” Dokić said.
He added that although Montenegro is not an EU member, it gravitates toward the European market, so it is natural that, during a period of EU recession, Montenegro’s economic growth would be low.
“To keep up with this level of consumption, Montenegro needs a growth rate between 6% and 7%. Anything below that is disastrous, as our public debt will continue to rise. The state, through excessive public spending, is simply increasing public debt. Where else can you finance consumption but through new borrowing? Or you will increase excise taxes, customs duties, and VAT, which I believe is the next step, or you will borrow more. There is no other solution for this level of public expenditure,” Dokić concluded.
He reminded that the Prime Minister himself recently stated that the number of employees in the public administration needs to be reduced by 20%.
The European Bank for Reconstruction and Development (EBRD) has maintained its 2.9% growth forecast for Montenegro’s economy for this year.
In the latest report, which was reviewed by the Mina-business agency, EBRD predicts a 3% growth for Montenegro’s economy in the coming year.
The EBRD also revised its forecast for last year’s economic growth in Montenegro, downgrading it from 3.8% (predicted in September) to 3.1%.
In a specific section of the report on Montenegro, EBRD stated that the GDP growth in the previous year was lower than initially expected in September.
“The slowdown from the strong growth of 2022 and 2023 reflects a significant deceleration in tourism after the record season in 2023. Growth last year was driven by private consumption and gross fixed capital investment, supported by an expansionary fiscal policy, as well as increases in salaries and pensions,” the EBRD report concluded.
