This report covers the main macroeconomic releases from July 4 until August 5 as well as the financial and political events that took place in Montenegro during this period.
The country’s finance minister forecast that the economy could achieve annual growth rates of over 5% in the medium term, driven mainly by an improvement of the public finances and by an investment cycle launched in the energy, infrastructure, and tourism sectors. The forecast is higher than the official government projection of an average growth of 3.7% in 2014-17.
The finance ministry also announced that the budget deficit narrowed 27.2% y/y to EUR 55.8mn in the first half of 2014 as strong revenue growth offset a softer increase in expenditures. The budget gap declined to 1.6% of the full-year GDP projection from 2.3% a year ago.
The report also contains information about the aluminium firm KAP, which was taken over by the local privately-held firm Uniprom. It also informs about the blocked bank account of publishing house Pobjeda as well as about the government’s takeover of EUR 3.7mn bank debts of state flag carrier Montenegro Airlines. In addition, the energy firm EPCG reported that its electricity output rose 40.3% last year, 21.2% above the plan.

Key points:
• CPI inched down 0.1% y/y in June following a 1.3% y/y decrease in May 2014. Retail sales rose for the fourth straight month, going up by a real 4.8% y/y in June following a 5.4% annual growth in the previous month.
• Industrial output dropped 26.4% y/y in June, deepening from a 23.4% annual contraction the month before.
• The unemployment rate measured by the number of registered unemployed fell to 13.52% in early July from 14.09% a month earlier. It remained below the end-2013 level of 14.8%, but was higher than the end-2012 unemployment rate of 13.46%. In addition, average net monthly wages shrank for the seventh consecutive month in June 2014, falling by 0.6% y/y to EUR 478.
• The number of foreign tourists visiting Montenegro increased by 1.3% y/y in June 2014, slowing down from the 5.5% annual growth the month before but the total arrivals inched down 0.8% y/y due to a 19.1% drop in domestic tourists.