Podgorica, (MINA-BUSINESS) – The World Bank (WB) believes that Montenegro needs to enhance policy predictability and speed up its structural reforms in order to reduce downside risks and assure the continued improvement of growth and labor market prospects.
According to the World Bank’s Western Balkans Regular Economic Report, Montenegro’s economic outlook is positive, but despite moderation downside risks are still high.
“The economy is expected to grow by an average of 2.6 percent in 2019–20 because of declining transport investments and personal consumption,” says the report, which was presented this week.
The WB says that, as investment slows, so will economic growth, unless productivity gains and new private sector investments unlock Montenegro’s full growth potential.
“Poverty is expected to again decline in 2019, to an estimated 4.6 percent, subject to improvements in private sector employment and earnings,” the report says.
Externally, slow growth in the EU and accession prospects, possible tightening of financing conditions for emerging markets, as well as regional political situation are the main downside risks.
The report says that the large fiscal deficit and growing public debt call for sustained implementation of the fiscal consolidation.
“The 2018 budget revision delayed for a year the initial objective of reaching a balanced budget by 2019 and bringing public debt down to 60 percent by 2020,” the report says.
The WB says that the possibility of tightening financing conditions at international capital markets calls for prompt action to reduce public debt and Montenegro’s external imbalances.
“These are likely to stay high, given the import dependence of Montenegro’s current growth,” the report says.
The World Bank expects that publicly guaranteed debt is expected to rise to 75 percent, up from 72.5 percent in 2017, as the government builds up deposits for 2019 financing through the liability management operation.
The 14th WB report covers Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia.
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