Page 58 - SE Outlook Regions 2023

Montenegro's total external trade in goods through October was
€3.52bn, indicating an increase of 47.9% in comparison with the
previous year. The main export destinations for Montenegrin producers
were Serbia (€115.3mn), Switzerland (€105.3mn) and Bosnia &
Herzegovina (€74.7mn). Serbia (€506.9mn) was the main source of
imports, followed by China (€270.1mn) and Greece (€247.4).

Although Montenegro is active in trading with its neighbours, the
government has assessed that the Open Balkan initiative created by
three fellow Western Balkan states lacks transparency and relies on the
personal relations of “charismatic leaders”.

Montenegro has been refusing for years to join the Regional Open
Balkan initiative, founded by Albania, North Macedonia and Serbia.
Kosovo and Bosnia & Herzegovina are also reluctant to join the
initiative. For Montenegro, it is an undesirable substitute for and
distraction from European integration.

In 2019, Albanian Prime Minister Edi Rama, North Macedonia’s former
premier Zoran Zaev and Serbian President Aleksandar Vucic pledged
to work together on the initiative and invited other Balkan countries to
join.

However, Bosnia and Montenegro have said they see no particular
benefits from the initiative, as easing travel and trade are already
covered by the wider CEFTA trade agreement between countries in
Southeast Europe. Kosovo has said it would prefer an improved version
of the CEFTA agreement.

2.7.3 Inflation and monetary policy

The International Monetary Fund (IMF) has projected that Montenegro's
consumer prices will rise by 16.3% in 2022 and by 7% in 2023. The
European Commission expects that the consumer price index (CPI)
inflation will slow down to 6.1% in 2023 from 12.3% in 2022. In 2024,
inflation is expected to cool down to 3%.

According to the World Bank, inflation should slow down to 5.9% in
2023 from 12.3% in 2022. Consumer price growth should further slow
down to 2.6% in 2024.

According to the latest available statistics office data, Montenegro's
consumer prices went up by an annual 16.8% in October, after rising by
16% y/y in September. Month on month, consumer prices moved up
1.4%, after going up by the same margin in the previous month.

Food and non-alcoholic prices increased the most in October, by 27.1%
y/y, followed by restaurant and hotel prices, which increased by 17.2%
y/y, and housing costs, which were up by 13.8% y/y.

58 SE Outlook 2023 www.intellinews.com