Page 41 - SE Outlook Regions 2024

2.8.1 GDP growth
Montenegro’s economy has been recovering for two years from the deep recession caused by the coronavirus (COVID-19) pandemic as it relies strongly on tourism. In 2023, the GDP is expected to grow by nearly 5% y/y. Projections for 2024 are that the economy will significantly slow down, mainly due to high inflation and the Russian war in Ukraine.
The European Commission expects that Montenegro’s economy will grow by just 2.7% in 2024 and will slow further to 2.3% in 2025 amid headwinds from still elevated inflation, tighter financing conditions, domestic political fragmentation, and weak external demand. These factors are expected to weigh on real disposable income, private consumption, recovery of investment and tourism exports, according to the EC.
On the other hand, the political situation in Montenegro remains complicated with the new ruling coalition likely to enact populist policies. At the same time, the EC does not expect any major reforms over the next two years that could boost economic growth.
The IMF has a significantly more positive projection for Montenegro’s economic growth in 2024, setting it at 3.7%, but still below the economic expansion in 2023.
According to the World Bank, Montenegro’s GDP will be affected by the slowing of the global economy in the next two years with growth seen at 3.2% and 3.1% in 2024 and 2025 due to declining private consumption. It also expects that tourism will continue growing in 2024, after surpassing its record high level from 2019 last year.
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