WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

GDP growth in 2024 is estimated to have been 3.2% – down from 6.3% in 2023, due mainly to a weaker tourist season and reduced exports. However, for 2025 we project growth to accelerate to 3.7%, as major infrastructure projects get under way – despite increased energy imports, as the country’s sole coal-fired power plant is closed for reconstruction. Inflation slowed significantly last year to an average of 3.4%, but rising wages, pensions and energy costs are likely to prevent further disinflation in 2025; we anticipate average inflation this year to be 3.6%. The unemployment rate dropped to a record low of 11.3% last year, continuing its positive trend – albeit at a slower pace than anticipated by the government. In 2025, Montenegro faces over EUR 1bn in debt repayments and the challenge of building up fiscal reserves amid high external financing costs. Inefficient management and defaulting state-owned enterprises, an expanding public sector and rising wages are all placing a strain on the budget. The government’s policy of boosting net salaries by reducing contributions to health insurance and pension funds is putting further pressure on public finances. On the political front, EU membership remains a top priority, with three negotiating chapters provisionally closed in December 2024 and an ambitious plan to conclude the remaining 27 chapters by 2026. However, political instability surged at the end of 2024, when the opposition blocked adoption of the 2025 budget in protest at what it regards as unconstitutional changes to the composition of the Constitutional Court. Additionally, the country has been shocked (and mass protests sparked) by the repeated mass shootings, which has served to highlight severe shortcomings in the security sector.