Economic activity after the pandemic was an average of 8,5 percent in the period 2021-2023, while growth of 3,4 percent is expected in Montenegro this year, said World Bank economist for Montenegro Milan Lakićević.
He pointed out that last year, Montenegro achieved the highest growth rate of six percent, and that this was driven by the strengthening of tourism and private consumption. This was also reflected in the labor market and, as he explained, the employment rate reached a new maximum, while unemployment reached its lowest level in 2023. He pointed out that they expect a slight drop in GDP during the next year due to the reconstruction of the thermal power plant in Pljevlja and an indirect increase in electricity imports. .
He added that they expect economic growth in 2025 to be around 2,8 percent.
This was announced during the presentation of the regular economic report of the World Bank for the Western Balkans.
Lakićević added that the pace of poverty reduction is decreasing, but also that non-performing loans in Montenegro are still at the highest level in comparison to the region, and that in December 2023 they amounted to 5,9 percent.
"Inflation has been significantly reduced because it came from a high base since last year, when it reached two-decade highs. Now we see that the domestic pressures on inflation that come through wage increases and production costs are persistently high," Lakićević pointed out. and stated that inflation is no longer driven by food and energy prices, but by the prices of clothes, shoes, housing...
Lakićević said that the public debt has decreased, but that there is a vulnerability considering that in the next two years some of the debts will be collected. He explained that economic growth in the Western Balkans has returned to pre-pandemic rates, that employment growth and poverty decline have slowed, but that invigorating growth is needed.
He explained that current account deficits have decreased. Among the factors that contributed to the growth of income during the last year, Lakićević stated that special growth was in the case of VAT and non-tax revenues.
World Bank operations officer Denis Mesihović stated that economic growth is expected this year, and that they expect the level of growth in 2025 to return to the levels before the coronavirus pandemic. He stated that reforms are crucial and necessary in order to achieve convergence with the EU and raise the standard of living in the Western Balkans.
In 2024, as Mesihović said, they expect an increase in economic activity in the region to 3,2 percent, while an increase to 2025 percent is expected in 3,5. The conclusion of the report is that in order to reduce the difference compared to the European Union and the standard of living there, it is crucial to implement reforms, i.e. to increase investment in the green economy in cities, which will enable them to contribute more effectively to the overall economic development.
He explained that the Western Balkans has gone through a series of shocks in recent years, but that mild optimism infuses the new growth plan of the European Union. He stated that the growth was also influenced by the shortening of waiting times at borders and the improvement of payment transactions. Some of the remaining risks are certainly inflation, migration, political instability...
Consultant for the World Bank, Mustafa Čopelj, referred to the cities of the Western Balkans, stating that the cities in the region are small, rare and getting smaller. He pointed out that the capital cities make up a large part of the GDP, that they are the centers of housing and employment... He also stated that Montenegro has made significant progress towards the green transition.
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