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Montenegro's GDP to fall 14.3% in 2020 - EU Commission

Author Radomir Ralev
Montenegro's GDP to fall 14.3% in 2020 - EU Commission European Commission. Author: Sébastien Bertrand. License: Creative Commons, Attribution 2.0 Generic.

PODGORICA (Montenegro), November 5 (SeeNews) - Montenegro's economic output is expected to decline by 14.3% in 2020, the European  Commission said on Thursday, revising its spring forecast for a 5.9% contraction.

"After a relatively soft first wave of COVID-19 infections in spring, a much bigger and extended second wave followed soon after. The shock had widespread effects across the economy, depressing not only tourism and retail services, but also trade, investment employment and public finances," the EU's executive body said in its Autumn 2020 Economic Forecast report.

The baseline scenario is for a gradual recovery in 2021 and 2022, driven by planned investment in tourism and the energy sector as well as public and private construction activity, with the revival of private consumption to be supported by rising employment, stronger remittances and credit growth, the EU Commission said.

The risk of default could rise in 2021, as a number of companies might be put at risk of insolvency once public support comes to an end, while the decline in imports and investment due to coronavirus-related disruptions and lower domestic demand is expected to help easing the trade deficit in 2020 and 2021.

Inflation is expected to remain subdued, coming into negative territory in 2020, before some modest growth in 2021 and 2022, the Commission said.

Montenegro's main economic indicators outlook, as per Autumn 2020 Economic Forecast report:

  2020 2021 2022
GDP growth rate (pct change) -14.3 6.8 3.7
General government gross debt (as % of GDP) 87.3 85.6 83.0
Unemployment rate (as % of total labour force) 18.1 16.6 15.9