Montenegro’s positive economic outlook: Continued growth and strategic fiscal reforms

Positive macro-fiscal trends are expected to continue in the new year, according to Finance Minister Novica Vuković, who emphasized that the strategic goal of Montenegro’s economic policy remains achieving smart, sustainable and inclusive economic growth.

The government will prioritize strengthening the economy and maintaining fiscal stability to create better economic conditions for citizens, Vuković stated. He is confident that the country’s positive macro-fiscal trends will strengthen confidence in the macroeconomic stability of Montenegro, which is key to building a sustainable and competitive economy.

Vuković highlighted that Montenegro enters this year with better economic indicators and growth potential. The economy has been growing rapidly in the regional and European context, with a significant increase in GDP over the past few years. He noted that investments, particularly in infrastructure, healthcare, education, tourism, energy and agriculture, are expected to continue driving economic expansion.

International rating agencies and institutions such as the European Commission, World Bank and IMF have also confirmed positive prospects for continued economic growth. Vuković acknowledged the challenges of the past year, including inflationary pressures, geopolitical instability, and unfavorable economic outlooks for the EU. Despite these challenges, the country maintained macroeconomic stability, recorded high budget revenues, and saw growth in construction, trade, and transport sectors, alongside diversification in the tourism industry.

The government’s economic policy focused on improving the standard of living, tax and fiscal reforms, and increasing minimum and average wages through the “Europe Now 2” program. This led to higher wages, reduced informal economy space, and improved investment conditions by lowering business barriers and labor costs.

Montenegro’s economy grew by 3.1% in the first three quarters of the year, with a notable 2.6% growth in the third quarter, surpassing the EU average of 1.3%. Household consumption increased, and investment activity also grew, with foreign direct investment rising by 14.3%. Employment and average net wages increased, while unemployment continued to fall.

The banking sector also saw positive trends with stability, high profitability, and growth in new loans, accompanied by declining interest rates. The annual inflation rate was the lowest since 2021, driven by government measures to limit profit margins.

In the first ten months of the year, average net wages increased by 7.7% and employment grew by 5.4%. Fiscal policy focused on maintaining stability, improving living standards, strengthening fiscal discipline, and boosting investments in strategic sectors. Future priorities will focus on diversifying the economy and increasing resilience to external shocks.

The Finance Ministry’s projections show an average annual growth of 3.7% for Montenegro’s economy from 2024 to 2027. The forecast for 2025 is 4.8% growth, driven by increased consumption and investment. Furthermore, fiscal reforms, including higher wages and pension increases, are expected to stimulate private consumption.

The government expects a continued increase in budget revenues, which are projected to reach 2.88 billion EUR in 2025, 3.7% higher than the previous year. This growth will be driven by rising consumption, higher tax collection, and reduced informal economy.

In 2025, the government will prioritize policies to stabilize prices and enhance citizens’ purchasing power. Economic policy will focus on raising standards through higher wages and pensions, with an emphasis on making the labor market more attractive to young people, improving business conditions, and attracting sustainable investments.

Vuković also highlighted the “Europe Now 2” program’s impact on improving citizens’ standards of living, particularly through higher wages for young people, and the government’s “Limited Prices” initiative, which helped reduce inflation.

Montenegro’s integration into the EU’s Single Euro Payments Area (SEPA) in 2025 is also a major step in the country’s EU integration process. The government has enabled citizens and businesses to benefit from the EU’s single market even before Montenegro’s EU accession. SEPA payment schemes will be available to Montenegrin banks from April 2025, in line with European Payment Council schedules.