PODGORICA (Montenegro), October 7 (SeeNews) – Montenegro's economy is expected to contract 12.4% in 2020, due to the COVID-19 pandemic, before bouncing back to 6.9% growth in 2021, the World Bank said on Wednesday.
"The COVID-19 crisis has again exposed Montenegro’s vulnerability to external shocks, including its limited fiscal buffers. The economy is projected to contract by about 12% in 2020, the deepest recession in decades," the World Bank said in its Europe and Central Asia Economic Update Fall 2020.
In its Global Economic Prospects June 2020 report, the World Bank predicted that Montenegro’s economy will contract by 5.6% in 2020, before growing 4.8% next year.
The uncertainty is high, and Montenegro faces both fiscal and external risks, while the outlook depends heavily on the COVID-19 pandemic developments, the World Bank said.
"The total output loss due to the crisis is projected to be fully recovered only in 2022 when the economy is projected to grow 4.2%. The anticipated tourism recovery will support export and consumption growth."
The expected completion of the construction of the priority section of a key motorway in 2021 is projected to push investment in that year but attenuate total investment in 2022, according to the report.
"External imbalances are expected to remain elevated in 2021, but the finalization of the import-dependent motorway section and stronger exports led by the tourism recovery are projected to reduce the current account deficit to 11 percent of GDP in 2022," the World Bank said.
The Western Balkans region comprising Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia, will face an economic decline of 4.8% in 2020, the World Bank said. Growth in the region is projected at 3.5% in 2021.