June 07, 2018 - The European Bank for Reconstruction and Development (EBRD) revised economic forecasts for 2018 on May 09, 2018. According to reports, countries where the EBRD invests, have all experienced expansions in their economies this year.
The EBRD’s Chief Economist, Sergei Guriev, is optimistic about the future, and he explained that he expects the further recovery of all the countries EBRD has invested. “The good news is that the current recovery provides a solid window of opportunity for structural reforms of product, capital and labor markets. These countries need to improve governance, promote integration into the global economy, and invest in human capital and sustainable infrastructure”.
According to the EBRD reports, “In south-eastern Europe, growth momentum is also expected to ease but remain strong overall, with average growth declining from 4.1 percent in 2017 to 3.6 percent in 2018 and 3.5 percent in 2019.”
The EBRD, within the Macro Poverty Outlook for Europe and Central Asia, has also created a report with a concise overview of recent country-specific developments and forecasts for a range of macroeconomic, monetary, fiscal, and social indicators for the state of Montenegro. The report said that the economic improvements within 2017 were the result of significant investments made for the construction of the Montenegrin highway and also a good tourism season. Still, “while fiscal consolidation efforts are underway, led by tax changes, high deficit and public debt require continued efforts”, according to the report.
The growth of the economy in 2017 is estimated to be 4,3 percent. Even though Montenegrin exports were increased due to the improved European union demand, the import content was still high, and it continued to contribute negatively to economic growth. Also, the report mentioned that “Montenegrin Government launched an ambitious fiscal consolidation program in 2017 reducing the deficit by one percentage point of GDP in 2017 compared to a no-reform scenario.”
EBRD also added that the Montenegrin economy is expected to grow by an average of 2,5 percent annually in 2018-2020 as a result of public investments and personal consumption. “The fiscal framework that aims to have a balanced budget by 2019, from over 5 percent deficit in 2017, will require credible spending consolidation in the wage bill, social transfers, and operational costs to put public deficit and debt on a sustainable trajectory,” it is stated in the report. The forecast for real GDP Growth (in percent) as of 09 May 2018 is 3,3 for 2018 and 2,7 for 2019. The EBRD added its recommendations to policy creators in Montenegro, stating that they need to pay particular attention to the reduction of unemployment, especially for youth and mitigating short-term poverty and social impacts of fiscal consolidation and facilitating access to employment.
