World Bank Revises Upward Montenegro's Economic Outlook
The World Bank announced on Tuesday, October 7, 2025, an upward revision of its Gross Domestic Product (GDP) growth forecast for Montenegro in 2025, now projecting a rate of 3.3%. This marks a 0.1 percentage point increase from its previous forecast issued in June. The international financial institution cited strong private consumption, rising real wages, and continued investment in infrastructure and renewable energy as key drivers behind this optimistic outlook.
Key Economic Drivers and Projections
Montenegro's economic expansion is expected to be primarily fueled by several internal factors. The World Bank's latest Western Balkans Regular Economic Report highlights that private consumption, bolstered by higher net real wages and credit growth, will play a significant role. Furthermore, sustained investment in infrastructure and renewable energy projects is anticipated to contribute substantially to the country's economic momentum. The World Bank projects an average annual GDP growth of 3.2% for Montenegro between 2025 and 2027.
Addressing Economic Challenges and Vulnerabilities
Despite the positive growth forecast, the World Bank also pointed to existing economic challenges and vulnerabilities. Inflation, which significantly decreased from 8.6% in 2023 to 3.4% in 2024, is expected to soften further to 2.9% in 2025 and 2.3% in 2026. However, the country's current account deficit is projected to widen to 18.5% of GDP in 2025, largely due to increased energy imports. The fiscal deficit is also expected to rise to approximately 4% of GDP in 2025 before gradually declining. Public debt is forecast to reach around 65.8% of GDP by 2027, necessitating sustained fiscal discipline. Montenegro's small, open, and service-based economy remains highly vulnerable to external shocks, with a heavy reliance on tourism revenue further increasing this exposure.
Path Towards Sustainable Growth and EU Accession
The World Bank emphasized that ensuring fiscal sustainability, strengthening risk management, and implementing targeted poverty-reduction policies will be crucial for Montenegro amidst persistent geopolitical and trade uncertainties. The country's aspiration to join the European Union (EU) remains a significant driver for reforms and long-term development. Montenegro's recent entry into the Single Euro Payments Area (SEPA) in November 2024 is also expected to strengthen financial integration, reduce transaction costs, and enhance investor confidence. The World Bank's new Country Partnership Framework (CPF) for Montenegro for 2025-2029 aims to support sustainable economic growth and enhance climate resilience, focusing on improving fiscal management, increasing competitiveness, and fostering better integration with European markets.
6 Comments
Katchuka
That current account deficit is alarming. Growth doesn't fix fundamental issues.
Eugene Alta
Decreasing inflation is a positive sign for household budgets, but the rising fiscal deficit suggests more austerity might be needed down the line.
Noir Black
Fiscal deficit rising to 4% is unsustainable. They need real fiscal discipline.
Karamba
A 0.1% increase is hardly a massive leap. Let's not get ahead of ourselves.
Africa
It's encouraging to see private consumption and wages rising, but the projected public debt levels by 2027 could stifle long-term stability.
dedus mopedus
Rising real wages and infrastructure investment? That's how you build a future!