In the first half of 2026, Montenegro’s industrial production saw a significant overall increase; however, this growth was primarily attributed to electricity generation rather than a widespread recovery in manufacturing, mining, or processing sectors. The total industrial output rose by 13 percent compared to the same period in 2025, with the electricity, gas, and steam supply surging 43.5 percent. In contrast, mining and quarrying experienced only a marginal increase of 0.5 percent, while manufacturing saw a decline of 0.4 percent.
The trend became more evident in June 2026, where total industrial production was up 30.1 percent year-on-year. Mining recorded a substantial growth of 71.6 percent, while manufacturing increased by just 2.5 percent. Electricity output more than tripled compared to the previous year. Month-on-month comparisons also showed an increase in industrial production of 21.1 percent from May to June, driven by mining’s growth of 16.3 percent, manufacturing’s rise of 16.7 percent, and a remarkable 36.1 percent increase in electricity supply.
The fluctuations in electricity production are influenced by factors such as hydrology and the operational status of generating assets. Periods of favorable hydropower conditions or the return of capacity after maintenance can lead to significant statistical increases without necessarily enhancing the industrial base. Similarly, mining output can be affected by activity at a limited number of sites, impacting national production figures.
The boost in electricity generation presents economic advantages, including reduced imports, enhanced export capabilities, and improved operational conditions for EPCG. Moreover, this development lays a foundation for future investments in electrification, renewable energy sources, and efforts toward industrial decarbonization.
<pDespite the positive trends in electricity generation, manufacturing remains weak. The average output for this sector in the first half of 2026 was still 0.4 percent below that of the previous year, despite a stronger performance in June. This aligns with trade data indicating declining exports while imports of machinery, vehicles, pharmaceuticals, electrical equipment, and processed goods continued to rise.
<pFor Montenegro to achieve sustainable industrial growth, there is a need for expansion in sectors that can effectively process domestic or regionally sourced materials into higher-value products. Industries such as aluminium and metal fabrication, wood processing, food and beverage production, marine services, electrical equipment assembly, and construction-material manufacturing present more viable pathways than attempting to recreate large-scale integrated industrial complexes.
<pEnergy policy plays a crucial role in this transition. The potential for Montenegro's electricity-generation capacity to become an industrial asset hinges on establishing long-term supply contracts, ensuring reliable grid infrastructure, and verifying low-carbon production methods. Manufacturers focused on exports increasingly require transparency regarding the source and carbon intensity of their electricity supply, particularly when engaging with European Union markets.
<pAdditionally, it is essential for Montenegro to distinguish between fluctuations in electricity sector performance and genuine advancements in industrial productivity when formulating investment policies. Hydro-driven increases can artificially enhance annual output figures and public revenues while leaving key aspects like manufacturing employment and export diversification largely unchanged.
<pOverall, while Montenegro's power sector demonstrated positive developments during the first half of 2026, the broader productive economy has not yet achieved significant transformation through manufacturing growth.
