As Montenegro approaches the 2026 tourism season, its external economic position appears less robust than initial visitor statistics may indicate. While the country has historically benefited from a substantial surplus in travel, transport, and other internationally traded services, recent balance-of-payments data for the first quarter reveals a narrowing surplus alongside a persistent merchandise trade deficit.
The current account deficit for the first quarter of 2026 reached €594.9 million, reflecting a 15.1 percent increase from €516.6 million during the same period in 2025, according to the Central Bank of Montenegro. The overall deficit in goods and services rose by 7.5 percent to €690.2 million.
A significant factor contributing to this imbalance is the decline in goods exports, which fell by 11.3 percent to €143.2 million. In contrast, imports remained relatively stable at €917.8 million, leading to an expanded goods deficit of €774.6 million, more than five times higher than export values.
This situation is not uncommon for a small, tourism-driven economy like Montenegro, which relies heavily on imports for consumer goods, vehicles, fuel, and construction materials. The challenge lies in whether the services surplus can grow sufficiently to offset the merchandise trade gap.
During the first quarter, the services surplus experienced a decline of 26.7 percent to €84.4 million, down from €115.2 million in early 2025. Total services revenue decreased by 14.7 percent to €311.8 million, while expenditures dropped by 9.2 percent to €227.4 million.
This downturn was observed across various service categories, not just tourism. The transport sector reported a surplus of only €8.1 million, marking a dramatic decrease of 62.7 percent year-on-year. Transport revenues fell by 23.2 percent to €120.2 million, while expenditures decreased by 16.8 percent to €112.1 million.
The figures underscore Montenegro’s dependence on foreign transport providers and highlight the volatility associated with income from ports, aviation, and maritime services. The performance of key transport entities such as the Port of Bar and regional logistics remains inconsistent, limiting the country’s ability to leverage its strategic Adriatic location effectively.
The travel sector continued to be a strong contributor, with receipts from international visitors totaling €86.4 million, down by 2.3 percent. Conversely, Montenegrin residents’ travel spending abroad increased by 8.3 percent to €16.1 million, resulting in a travel surplus decrease of 4.5 percent to €70.3 million.
The first quarter is typically a weaker season for tourism and should not be seen as indicative of summer performance trends. The bulk of Montenegro’s tourism revenue is generated from June through September in popular destinations like Budva and Kotor. However, early indicators suggest that tourism growth may not continue at previous rates.
From January to May 2026, tourist arrivals saw only a slight increase of 0.94 percent, with overnight stays up by 1.10 percent. Foreign visitor numbers rose by 0.54 percent, while foreign overnight stays increased by 0.90 percent. This stagnation implies that Montenegro is increasingly reliant on higher accommodation prices and guest spending to achieve nominal revenue growth.
This shift poses new risks for the tourism sector; while rising prices may enhance revenue, they could also diminish competitiveness against neighboring countries like Croatia and Greece. Factors such as limited air connectivity outside peak months, coastal congestion, skill shortages in hospitality, and varying municipal infrastructure further restrict the sector’s potential for year-round high-value tourism.
Major developments like Porto Montenegro, Luštica Bay, and others have elevated property values and enhanced international visibility for Montenegro; however, their economic impact extends beyond mere tourism revenues due to costs associated with imported materials and foreign contractors.
The construction services sector reflected similar pressures as its surplus dropped from €4.3 million to only €343,000. Revenue from construction services fell by 18.9 percent to €6.8 million, while expenditures surged by 57.2 percent to €6.5 million.
The decline was also noted in other business services where revenue from consulting and engineering activities decreased by 24.5 percent to €37.3 million, leading to a reduced surplus of approximately €5.6 million.
This highlights a significant contrast with Serbia, which has established a robust ICT and professional-services export base that acts as a counterbalance to its merchandise trade deficits; Montenegro’s service sector remains heavily reliant on travel and transport revenues.
The country possesses opportunities for diversification into areas such as port logistics and digital services that could generate more stable foreign earnings throughout the year. Enhanced cross-border business infrastructure through SEPA participation is expected in July 2026; however, mere modernization will not suffice to create a competitive export environment.
An additional concern arises from income accounts as Montenegro shifted from a primary-income surplus of €30.4 million in Q1 2025 to a deficit of €4.5 million. Expenditures related to portfolio investment income surged to €65 million, indicating rising costs associated with servicing securities held by foreign investors.
The secondary income component remained supportive with a surplus of €99.8 million, an increase from €94.9 million. Remittances and other transfers continue to provide some cushioning for the current account but are insufficient to completely offset the significant merchandise deficit nearing €775 million in just one quarter.
Foreign direct investment (FDI), crucial for financing these deficits, showed mixed results with gross inflows amounting to €276.5 million between January and April, reflecting a decline of 7.1 percent. Net inflows decreased significantly by 26.8 percent to €119.3 million, while total outflows rose by 16.7 percent to €157.2 million.
The composition of FDI remains predominantly focused on real estate investments which accounted for over half of gross inflows at €147.4 million. Investments in local companies increased markedly but still represent a small fraction of overall inflows.
This reliance on property investment brings foreign currency into Montenegro but does not necessarily ensure ongoing export cash flow associated with productive corporate ventures post-construction.
The current state of Montenegro’s service economy indicates profitability yet remains constrained in scope; while early indicators do not predict an unsuccessful tourism season ahead, they highlight vulnerabilities tied closely to seasonal performance fluctuations during peak months.
