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Nov 01, 2017 16:35 EEST
November 1 (SeeNews) - Erste Group said it has lifted its forecast for Montenegro’s economic growth to 4.2% in 2017, from 3.5% projected earlier, on the back of stronger consumption, investments and lower imports.
Montenegro's gross domestic product (GDP) is expected to grow by 3.5% next year, mostly supported by domestic demand, while external demand should play a dragging role due to the highly import-oriented structure of the economy, Erste Group's analysts said in a macroeconomic outlook report on Montenegro published on the bank's website on Tuesday.
Erste estimates that inflation will be close to 3% in 2017, mostly shaped by an increase of excises duties and accompanied by stabilising oil and food prices on international markets, while monetary trends point to a rise in lending in the private sector, the steady rise of the deposit base and improvement of financial stability indicators, Erste said.
The mid-term outlook for foreign direct investment (FDI) is still relatively bullish and it is expected to keep its important stabilising role. However, more efforts are needed in terms of diversification of exports base improve external stability indicators. "With the fall in the loan-to-deposit ratio and clearer bank balance sheets, we see potential for the beginning of the new lending cycle."
"The fiscal outlook is mostly determined by highway-related costs and borrowing, where we expect the general government deficit to be around 5.5%-6% of GDP in 2017 and 2018, which will lead the public debt figure towards the 70% of GDP mark. However, the government adopted an ambitious fiscal austerity program which could lead to a notable fiscal surplus, excluding capital budget," Erste said.
Montenegro's GDP grew by 4.2% on the year in the first half of 2017р driven mainly by investments in construction, tourism and transport, the central bank said earlier this month, citing preliminary figures.
In 2016 Montenegro's economic growth stood at 2.3%.
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