Inflation in Montenegro is not abating, and new geopolitical upheavals are further complicating the economic situation, economic analyst Zarija Pejović told Boje jutra on TV Vijesti.
He warns that we are in a phase where price increases are becoming an expected phenomenon.
"We have already entered the psychology of inflation - traders calculate in advance that goods will be more expensive, so they immediately raise prices," Pejović points out.
He adds that the biggest impact of inflation so far has been on food and energy, and these are precisely the categories that most affect the standard of living of citizens, so although the fact that the average salary has exceeded 1.000 euros is often emphasized, he emphasizes that this number does not reflect the reality of most citizens.
"The average is deceiving. The median salary is a kind of central salary, you know, it's not a central one, a middle level of salary, a level of salary that is, let's say, closest to the widest number of people who receive salaries in terms of salary range. Our median salary is only 39 percent in 2022. Which means that our standard according to this data from 2022, which is adjusted for the purchasing power of citizens, means that the standard is more than half the EU average," says Pejović.
He also points out that Montenegro is extremely vulnerable to external shocks, as it is still almost entirely dependent on imports - whether it is oil, food or consumer goods.
"Any new crisis, whether it's in the Middle East, Ukraine or elsewhere, can spill over directly to us - through prices and a drop in tourist demand," he adds.
Although we currently have among the lowest fuel prices in the region, this is, as he says, the result of reduced excise duties, not market advantages. The country still does not have commodity reserves that could mitigate price shocks if there is a jump in energy prices on the world market. Montenegro cannot count on long-term economic growth if it relies only on tourism and fiscal reforms.
"We need slightly better economic policies, to produce those products that we will sell more expensively on the world market, which are much more sophisticated, because as it is, we depend only on tourism, we depend on agriculture, which we have not developed enough. We have potential and we cannot expect that fiscal reforms, by directing a part of its revenues to net earnings, will increase our standard of living. I am afraid that this will only increase our deficit and our public debt," said Pejović.
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