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World Bank improves Montenegro's 2021 economic growth forecast

Author Radomir Ralev
World Bank improves Montenegro's 2021 economic growth forecast License: Creative Commons BY-NC 2.0

PODGORICA (Montenegro), October 6 (SeeNews) - Montenegro's economic output is expected to expand by 10.8% in 2021, the World Bank said, revising upwards its June forecast for 7.1% growth.

The World Bank expects Montenegro's gross domestic product (GDP) to grow by 5.6% in 2022, it said in its Europe and Central Asia Economic Update, Fall 2021 report published on Tuesday.

"Assuming a full recovery in tourism in 2022 and 2023, growth is projected to remain strong at 5.6% and 4.8%, respectively. Investments are expected to level off in 2022 as the highway construction is finalised by end-2021," the lender said.

Montenegro's government has announced stronger public capital spending starting in 2022, which would further boost medium-term growth, but public investment management challenges should be addressed in order to ensure stronger economic effect, the World Bank noted.

"The outlook is surrounded with multiple risks. A new wave of infections in Europe could slow down Montenegro’s economic recovery. Moreover, inflationary pressures in the US and the EU may accelerate monetary tightening which could translate into more expensive external financing."

Domestic risks stem from vaccination hesitancy, whilst possible new restriction measures could delay the recovery, according to the report.

The Western Balkans region comprising Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, and Serbia, will record economic growth of 5.9% in 2021, the World Bank said. Growth in the region is projected at 4.1% in 2022.