Recent national accounts for Montenegro indicate a more delicate growth framework than the government’s optimistic forecasts imply. In the first quarter, the country’s real GDP grew by 2.6 percent year on year, an increase from 1.5 percent in the last quarter of 2025, yet still falling short of the 2.8 percent recorded during the same period a year prior.
Household consumption saw a significant rise of 6.8 percent, while gross fixed-capital formation surged by 20.9 percent. Public consumption, however, experienced a modest increase of 1.2 percent. These figures suggest that factors such as wage income, credit availability, and construction activities are driving economic activity as the government embarks on a new cycle of infrastructure development.
Conversely, the external sector is facing challenges. Exports of goods and services plummeted by 14 percent year on year, following a decline of 12.8 percent in the preceding quarter. Imports only decreased by 1.3 percent, resulting in net exports detracting an estimated 3.8 percentage points from GDP growth.
This contrasting trend highlights a significant macroeconomic issue: while Montenegro is experiencing growth in investment and consumption, it is struggling to produce sufficient tradable goods and services to balance the import demands driven by construction, equipment purchases, consumer spending, and energy needs.
The disparity between official and private sector forecasts underscores this situation. The government anticipates a growth rate of 3.1 percent for 2026, whereas the European Commission estimates it at 2.8 percent, and Erste Group has revised its prediction down to 2.6 percent, from an earlier forecast of 3.3 percent.
Erste Group also predicts that nominal wage growth will decelerate from 15.5 percent in 2025 to around 3 percent this year. Rising fuel and import costs are expected to consume a larger portion of household income in the latter half of the year, which may dampen the consumption boost associated with recent wage reforms under the Europe Now 2 initiative.
The shift towards investment-driven growth is evident; however, much of this uptick is attributed to construction activities rather than an increase in productive capacity. The economic benefits will materialize once assets in transport, energy, and tourism start generating higher exports, fiscal revenues, or reduced import expenditures.
