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Economic Analysts Issue Warning: Ukrainian Departure Set to Negatively Affect Montenegrin Economy

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Warning from economic analysts – the departure of Ukrainians will have a negative impact on the Montenegrin economy, and Budva is the first to feel it – revenues are lower in numerous activities.

About a year and a half ago, a wave of Ukrainian citizens flooded Budva, seeking refuge in the tourism metropolis following the Russian aggression against their country. Thousands of Ukrainians, mostly affluent, came to Budva, where they rented apartments and houses, living with the belief that the war would end quickly.

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Today, many have returned to Ukraine or moved to other countries, mostly in Western Europe and Canada, as they did not find conditions in Budva to start a business or get employment, having spent their savings.

The arrival of Ukrainians was a significant financial injection, and almost every sector in Budva experienced increased revenues.

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Rental prices for apartments soared, and sales in stores during the winter months were comparable to the summer peak. Restaurant owners were rubbing their hands in satisfaction. However, in the past few months, especially since the end of the last season, the number of Ukrainian citizens has been consistently declining.

The number of Ukrainian citizens, as reported to Vijesti by the Tourist Organization, is 30% lower than in the same period last year.

In the first days of January, according to the Tourist Organization of Budva, they have 22% fewer registrations of stays by Ukrainian citizens, while from November 1st of the previous year to January 21st of this year, it is 30% lower compared to the same period the year before.

Milica Vučinić, the secretary of the Red Cross in Budva, states to Vijesti that since the beginning of the war in Ukraine, 1,136 individuals have registered.

According to the statistics of the Budva Red Cross, on July 15, 2022, there were 596 registered individuals, or 193 families; on January 9, 2023, there were 785 individuals, or 255 families; while on November 6, there were 1,136 registered individuals, or 361 families.

Red Cross data mostly reflect Ukrainians in a state of social or other needs, as thousands of them have not registered with this humanitarian organization.

The President of the Taxi Carriers Committee of Montenegro in the Union of Employers and the owner of the Budva taxi association Sany Taxi, Dejan Nuculović, in an interview for Vijesti, states that, comparing 2022 with 2023 from a business perspective and looking at regions, especially the central and southern regions, they had increased business volume due to a large influx of people from Ukraine and later from Russia.

These are people who fled the war and even relocated their businesses. However, in the third and fourth quarters of 2023, there was a noticeable drop in business. As we are engaged in transportation, we have noticed that many citizens of Ukraine and Russia are leaving Montenegro. The reason is not known to us – Nuculović emphasizes.

According to him, there is also a noticeably smaller traffic congestion, especially in the southern region where there were the most people from Ukraine and Russia.

I believe that the significant influx of people from the war-affected areas has indeed had an impact on our business, as well as on all other sectors. In addition to the benefits that carriers had, we also witnessed a very negative phenomenon – citizens of Ukraine and Russia organized illegal taxis and van transportation, especially in Budva, Bar, Tivat, Kotor, Herceg Novi, and Podgorica. The best evidence for this, especially during the tourist season, is social media platforms where any form of transportation can be ordered. Therefore, I appeal to the authorities to take action and stop illegal passenger transport and unfair competition. We are concerned about what will happen with the summer season because the past one was weaker compared to previous ones, and there are fewer tourists…

The decrease in traffic, by ten percent, is confirmed by Davor Dokić, the owner of the Budva-based company Mediteran Express, which manages local bus transportation. He notes that Ukrainians have mostly left, mainly heading west.

This will undoubtedly impact all activities and also lead to reduced state revenue due to lower VAT. The departure of Russians and Ukrainians will bring things back to normal, and this is the reality in Montenegrin tourism, as well as the economy. Russians will stay in somewhat greater numbers, but almost all Ukrainians will leave, as they have almost depleted the reserves they brought with them. Montenegro will lose a good portion of income, likely increasing the budget deficit and causing a greater need for additional borrowing.

The departure of Ukrainians has already been felt by restaurateurs. The president of the Association of Caterers in Budva, Aleksandar Jovanović, emphasizes that there has been a significant decline in business during the winter months, by 30 to 40%.

Luka Vučković, the owner of an old town establishment, points out that there is a noticeable slight decrease in turnover during the winter period compared to the previous year.

However, he highlights that Budva is becoming a place where it is “possible to sustain business throughout the year.”

Regardless of the departure of Ukrainians, the tourism metropolis is developing in a direction where it is possible to organize a certain form of winter tourism. We should not rely on the instant traffic that was there last winter because it is not sustainable. Budva must strategically focus on year-round tourism because we have the capacity and favorable weather conditions. I want to commend the opening of the new ferry line Budva – Dubrovnik and the announcement of a huge number of cruises for this year. The municipality of Budva plays a crucial role alongside the Tourist Organization in organizing various sports, cultural, and musical events that would revive our city throughout the year. We must nurture our products and culture to present ourselves in the best light on the tourist map. We can and must be better than the competition because we have the conditions for it.

That there is less turnover in stores is confirmed for Vijesti by Balša Mitrović, the executive director of the Budva-based company Megapromet, which manages a chain of supermarkets.

The decrease in the number of Ukrainians and Russians is evident, and in addition to that, our data also show a reduction in turnover month by month… The arrival of Russians and Ukrainians was felt as a benefit in all economic sectors, so their departure will be significantly felt in terms of a decline in turnover. Certainly, the decline will be noticeable in other parts of the coastal area as well because, according to our information, it is noticeable in all cities… We can talk about a decrease of about fifteen percent in the last three months, but some of our projections show that the percentage will not increase, and some of them will stay in Budva…

The departure of Ukrainians has certainly influenced the beginning of a decline in rental prices for apartments and flats. This summer, renting a one-bedroom apartment cost even 700-800 euros, but it seems that prices are now returning to normal.

However, this does not apply to the real estate market.

Ana Golubović Ramaj, the Sales Director at the Porto Budva complex, states for Vijesti that prices continue to rise, regardless of the smaller number of Ukrainians staying in Montenegro.

The rise in prices is caused by a significantly lower supply compared to demand, as well as the global increase in the prices of construction materials. Besides Ukrainian citizens, residents of Serbia, Bosnia, and Russia are actively buying and renting properties in Budva. Additionally, due to the unstable global economic climate, citizens of Montenegro are actively investing in real estate to protect their capital from inflation. Keeping money in a mattress or in banks at a minimal interest rate is certainly an outdated way of preserving acquired funds.

According to her, interest in real estate investment is skyrocketing among buyers from the region and the world.

Our country is recognized as a safe place for living and business. We witness a daily increase in the number of foreigners visiting our country to buy real estate solely for rental purposes, thus preserving and increasing their acquired capital.

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