Montenegro is positioned to take the biggest steps forward in their European Union accession negotiations. Hope is that these negotiations can be concluded by 2026 or 2027. The country is working to close six to nine chapters of the negotiations, FVN reported. They want to do this by the end of 2024. Montenegro is grappling with a wide range of economic issues, from inflation to a budgetary crisis. This admirable target comes slap bang in the middle of all those urgent concerns.
As of September 2024, Montenegro’s annual inflation rate was an average of 3.3% year-on-year. There was a significant drop starting in September of that year, with inflation dropping to as low as 1% on a yearly basis. This increase in inflation is having an effect on consumer expenditures and economic growth overall, something Montenegro has been fighting hard to maintain.
In March 2024 Montenegro issued an EUR 850 Eurobond. This clever financial strategy financed nearly all of the country’s gross refinancing needs for the entire year. This bond issuance serves as a key indicator that the country is committed to fiscal stability and continues to invest in economic reforms. This was followed by the government’s announcement of a especially large cut to its funding needs. By next year, they anticipate these needs to fall to about 8% of GDP, a significant decrease from the estimated 15% by 2027.
For Montenegro, general budget revenues and expenditures were nearly in line with their original plans. This leaves the country with a fiscal hole of 3.1% of GDP for the whole year. This is a strong performance given public finances are being squeezed from all economic directions.
Tourism, one of the most important sectors in Montenegro’s economy, had a disappointing year in 2024. Nominal tourism revenues, on the other hand, declined year-on-year by 3.1%, with the peak season performing above expectations in 2023 in terms of foreign arrivals. The country already experienced a 5% YoY decrease in nights spent by travelers, as reported earlier. These numbers represent the very real and continuing crisis facing the tourism industry, which is still so important to our country’s overall economic recovery and prosperity.
Montenegro’s real GDP growth reached a four-year high of 3% y/y in 2024. This rapid growth is a testament to the resilience and adaptability of the Montenegrin economy in the face of volatile external conditions and ongoing domestic structural reforms. The government’s commitment to make sure that improving EU accession negotiations is the most important thing gilding this positive economical direction.