October 25 (SeeNews) - Montenegro's government will need a careful management of its public debt and stronger control over its expenditures to satisfy its financial needs amidst tightening global financial conditions, the World Bank said.
The potentially increasing geopolitical uncertainty will diminish Montenegro's economic prospects, as inflationary pressures will accelerate monetary policy tightening, thus boosting financing costs, the World Bank said in its latest Western Balkans Regular Economic Report on Monday.
Political instability and delays in the formation of the government could further increase the risks to Montenegro's economy, the global lender said.
Montenegro's gross domestic product (GDP) is expected to increase by 6.9% in 2022, after growing by 13% in 2021. Economic expansion is projected to slow down to 3.4% in 2023 and 3.1% in 2024 as private consumption growth continues to decelerate.
The main drivers of Montenegro's economic growth will be the continuing recovery of investments, especially in the energy and tourism sectors. The rising energy prices negatively affect the vulnerable groups, but also contribute to the shrinking of Montenegro's trade gap as the country's energy exports increase, according to the report.
Montenegro's average annual inflation is projected to reach 12.3% in 2022, the World Bank said.