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In 2015, Mon­tene­gro’s econ­omy is ex­pected to grow by be­tween 3.0% and 4.7%, ac­cord­ing to fore­casts of the World Bank, the Euro­pean Bank for Re­con­struc­tion and Devel­op­ment, and the In­ter­na­tional Mon­e­tary Fund. The eco­nomic growth will be fu­elled by in­vest­ments in in­fra­struc­ture projects, es­pe­cially the Bar-Bol­jare mo­tor­way, for which the Mon­tene­grin govern­ment signed a 687 mil­lion euro loan deal with China’s Ex-Im Bank. Among the risk fac­tors for the Mon­tene­grin eco­nomic growth is the lower num­ber of Rus­sian tourists, who ac­count for more than 20% of the to­tal tourist ar­rivals.

Mon­tene­gro's econ­omy ex­pe­ri­enced sub­dued growth in 2014 due to weak do­mes­tic de­mand, in­suf­fi­cient ac­cess to fi­nanc­ing and drop in ex­ports. In­dus­trial pro­duc­tion also fell and the pri­vati­sa­tion of a num­ber of large state-owned en­ter­prises con­tin­ued to lag be­hind. The tourism sec­tor con­tin­ued to be key for the coun­try's econ­omy, ac­count­ing for about 20% of the gross do­mes­tic prod­uct (GDP) and of the to­tal em­ploy­ment. Mon­tene­gro man­aged to lower the un­em­ploy­ment lev­els but the lim­ited com­pany lend­ing ac­tiv­ity stalled earn­ings and weak­ened pri­vate con­sump­tion.

In March, Az­mont In­vest­ments, con­trolled by Az­eri state-owned oil com­pany SOCAR, launched the con­struc­tion of a lux­ury tourist re­sort on Mon­tene­gro's Adri­atic coast, worth more than 500 mil­lion euro. The re­sort should be com­pleted by 2016 and will open 6,500 jobs dur­ing the con­struc­tion pe­riod and 1,200 af­ter­wards.

In Fe­bru­ary, the Mon­tene­grin govern­ment signed an 809.6 mil­lion euro deal with China Road and Bridge Cor­po­ra­tion which to­gether with China Com­mu­ni­ca­tions Con­struc­tion Com­pany will build the Bar-Bol­jare mo­tor­way, part of Pan Euro­pean Trans­port Cor­ri­dor X.

In terms of busi­ness reg­u­la­tions, Mon­tene­gro was among the lead­ers in South­east Europe (SEE) by rank­ing 36th in World Bank's Do­ing Busi­ness 2015 re­port. Mon­tene­gro was sec­ond among the SEE coun­tries with the leader be­ing Mace­do­nia, which oc­cu­pied the 30th po­si­tion. Mon­tene­gro made deal­ing with con­struc­tion per­mits sub­stan­tially less costly by re­duc­ing the fee for the pro­vi­sion of util­i­ties on con­struc­tion land and elim­i­nat­ing the fee for ob­tain­ing ur­ban devel­op­ment and tech­ni­cal re­quire­ments from the mu­nic­i­pal­ity, ac­cord­ing to the re­port.

Mon­tene­gro's po­si­tion in the Global Com-

pe­t­i­tive­ness Re­port 2014-2015 pub­lished by the World Eco­nomic Fo­rum re­mained un­changed at 67th out of 144 coun­tries. The fac­tors weak­en­ing Mon­tene­gro's com­pet­i­tive­ness are in­suf­fi­cient ac­cess to fi­nanc­ing, cor­rup­tion and poor work ethic in the na­tional la­bor force.

Re­mit­tances from em­i­grants are an im­por­tant fac­tor for Mon­tene­gro's econ­omy, ac­cord­ing to data of the World Bank. In 2014, they to­taled 363.2 mil­lion euro, ac­count­ing for more than 10% of the coun­try's GDP. The re­mit­tances grew by 4.2% in com­par­i­son to 2013 and by 32.6% in com­par­i­son to 2012. Large share of re­mit­tances to Mon­tene­gro come from Ser­bia. In 2014 their share was 22.9% of the to­tal, fol­lowed by re­mit­tances from Turkey, ac­count­ing for 18.8% of the to­tal sum.

The coun­try's GDP to­talled 3.38 bil­lion euro, grow­ing by a real 1.5% on the year in 2014, ac­cord­ing to pre­lim­i­nary data of the Sta­tis­ti­cal Of­fice of Mon­tene­gro (MONSTAT). Fi­nal con­sump­tion in­creased by 1.3% in value in 2014. Gross cap­i­tal for­ma­tion was up by 5.5%, con­tribut­ing 20.0% to the GDP.

In­dus­trial out­put was down by 11.4% in 2014, ac­cord­ing to MONSTAT. The out­put of the elec­tric­ity and gas sup­ply sec­tor fell the sharpest by 19.6% and the man­u­fac­tur­ing sec­tor de­clined by 6.7%. The min­ing sec­tor ex­panded by 14.4%.

In­dus­trial sales de­creased by 7.6% in 2014, ac­cord­ing to MONSTAT. Sim­i­lar to the in­dus­trial out­put, the min­ing industry ex­pe­ri­enced a growth of 14.4% while the man­u­fac­tur­ing, and the elec­tric­ity and gas sup­ply in­dus­tries recorded drops of 10.5% and 9.0%, re­spec­tively.

Consumer prices in Mon­tene­gro turned to an an­nual av­er­age de­fla­tion of 0.7% in 2014 from 2.2% in­fla­tion a year ear­lier. In 2014, the high­est an­nual de­crease in consumer prices of 3.8% was reg­is­tered in the com­mu­ni­ca­tions sec­tor, fol­lowed by recre­ation and cul­ture with 2.6%, and food and non-al­co­holic bev­er­ages with 1.4%. The high­est in­crease in consumer prices was reg­is­tered in al­co­holic bev­er­ages and to­bacco, health, and restau­rants and ho­tels, of 3.8%, 2.3% and 0.6%, re­spec­tively.

Un­em­ploy­ment in Mon­tene­gro nar­rowed to 17.8% of the to­tal labour force in 2014 from 19.5% a year ear­lier, ac­cord­ing to data of MONSTAT.

The em­ployed population aged 15 years and older was 216,300 peo­ple in 2014, up by 7.1%. The youth (population aged 15-24) un­em­ploy­ment rate was down to 35.9%, com­pared to 41.8% in the pre­vi­ous year.

Loans to the non-govern­ment sec­tor to­talled 1.84 bil­lion euro as of end-2014, down by 1.1% y/y, ac­cord­ing to Cen­tral bank of Mon­tene­gro (CBCG). House­hold loans grew by 1.5% to 894 mil­lion euro, while loans to non-fi­nan­cial cor­po­ra­tions fell by 3.9% to 976 mil­lion euro.

The gross ex­ter­nal debt in­creased, to­talling 1.56 bil­lion euro at the end of De­cem­ber 2014, which was 46.0% of the pro­jected full-year GDP, ac­cord­ing to CBCG. It widened by 9.0%, or 129 mil­lion euro com­pared to De­cem­ber 2013.

The cur­rent ac­count turned to a deficit of 238.3 mil­lion euro in the fourth quar­ter of 2014 from a sur­plus of 165.0 mil­lion euro in the third quar­ter of 2014, ac­cord­ing to cen­tral bank sta­tis­tics data.

The trade deficit stood at 1.45 bil­lion euro in 2014, com­pared to 1.398 bil­lion euro in 2013, ac­cord­ing to MONSTAT.

Source: In­ter­na­tional Mon­e­tary Fund (IMF) World Eco­nomic Out­look Data­base – April 2015

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