This report covers the main macroeconomic releases from September 4 until October 6, 2014 as well as the financial and political events that took place in Montenegro during this period.
In the past month, the finance ministry cut its GDP forecast for the current year to 2.5% from 3.5%, which is less optimistic than the confirmed EBRD forecast for a 3.0% expansion in 2014.
Meanwhile, the country’s statistic office said the GDP growth slowed down to just 0.3% y/y in Q2 2014 from 1.5% y/y in the previous quarter. The office also revised down the 2013 GDP growth estimate to 3.3%.
In addition, the finance ministry revised up to 1.9% of GDP its budget gap forecast for 2014. It now sees the deficit doubling to EUR 65mn this year, up by EUR 38mn compared to the previous forecast.
The tourism ministry expect that the sector’s revenues will hardly exceed EUR 730mn this year.
The report also contains information on the latest developments at the Kumbor-based luxury resort project Portonovi in the Bay of Kotor, which is scheduled for completion by 2017. It also informs about Uniprom’s partial payments for acquiring aluminium firm KAP. The report provides details as well for Montenegro’s loan from China Exim Bank for the construction of the first priority section of the Bar-Boljare motorway project.

Key points:

• CPI dropped 1.1% y/y in July, softer than the 1.2% y/y decrease in July. Retail sales rose for a sixth consecutive month, going up by a real 5.3% y/y in July - the same as the month before.
• Industrial output dropped 12.7% y/y in August, softening from the 16.5% annual contraction the month before.
• The current account gap widened by 5.6% to EUR 442mn in H1 2014, equalling to 12.6% of the full year GDP forecast.
• The number of foreign tourists visiting Montenegro rose 1.7% y/y in the first eight months of the year. Total arrivals climbed 1.1% y/y to 1.2mn despite the 3.0% y/y drop in the number of domestic visitors.