PODGORICA (Montenegro), March 31 (SeeNews) – Montenegro's economy is expected to grow by 7.1% in 2021, before rising by 4.5% in 2022, the World Bank said on Wednesday.
"Due to a low base and assuming tourism recovers to 55% of 2019 levels, Montenegro’s economy is expected to rebound in 2021 with an estimated gross domestic product (GDP) growth of 7.1%. The total output loss is, however, projected to be fully recovered only in 2023 when the economy is expected to grow 3.5%," the World Bank said in its Europe and Central Asia Economic Update Spring 2021.
In October, the World Bank projected that Montenegro's economy will grow by 6.9% in 2021
External imbalances will remain elevated in 2021, but the finalisation of the import-dependent motorway section and stronger exports led by the tourism recovery are projected to reduce the current account deficit to 13% and 10% of the GDP in 2022 and 2023, respectively, the World Bank said. "After peaking at 105% of GDP in 2020, public debt is estimated to return to pre-crisis levels by 2023."
However, the actual debt reduction trajectory might be steeper or flatter, depending on the government’s medium-term budgetary plans which are still unknown, as it delayed the 2021 budget adoption, while the implementation of sound and credible fiscal policies is imperative for debt sustainability, the World Bank said.
"The outlook on employment is also highly uncertain and depends on the recovery of labour-intensive sectors. The speed of recovery of low-skill jobs will partly determine how fast poor and vulnerable households can return to pre-crisis income levels. The poverty rate is projected to decline to 17.9% in 2021," the international lender noted.
The current crisis has made the longstanding policy priority of improving economic resilience more urgent than ever, the World Bank said.
"In order to accelerate recovery and sustain inclusive growth and poverty reduction, Montenegro must keep macroeconomic stability, ensure inclusive and efficient provision of public services, carefully manage its natural resources and strengthen the independence and capacities of its institutions. The government decisions to tackle the SOE governance issues are important steps in the right direction," the bank added.
The Western Balkans region comprising Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia, will record economic growth of 4.4% in 2021, the World Bank said. Growth in the region is projected at 3.7% in 2022.