Montenegro has reported a significant widening of its merchandise trade deficit, nearing €2 billion in the first half of 2026. This trend underscores the nation’s reliance on tourism income, foreign investments, and external financing to bridge the gap between domestic production and consumption.
During this period, merchandise exports fell by 7.4 percent year-on-year, totaling €261.4 million. In contrast, imports rose by 3.4 percent, reaching €2.18 billion. Consequently, the trade deficit expanded to approximately €1.92 billion, which is about €91.7 million greater than the same timeframe in 2025. Exports accounted for only 12 percent of total imports.
This imbalance is pronounced even for a small economy primarily focused on services. For every €1 earned from merchandise exports, Montenegro spent over €8 on imports. While sectors such as tourism, transportation, financial services, and remittances help mitigate the potential risks associated with this imbalance, they do not eliminate the inherent vulnerabilities.
The European market represented a substantial portion of Montenegro’s exports, amounting to €246.6 million, or over 94 percent. Imports from Europe totaled €1.72 billion. Serbia remained the country’s most significant trading partner; however, this relationship was notably skewed with exports to Serbia at €70.1 million, compared to imports of €372 million, resulting in a bilateral deficit of approximately €302 million.
Bosnia and Herzegovina ranked as the second-largest export destination with purchases valued at €32.8 million, an increase of 38.8 percent. Exports to Kosovo nearly doubled to reach €21 million, while shipments to Croatia increased to €6 million. Despite these gains, they were insufficient to offset declines in established markets.
A significant drop in exports was observed with Switzerland, where sales decreased by 64.8 percent to €7.6 million. Exports to China also contracted by 69.4 percent, totaling €5.3 million, while shipments to Italy fell by 32.6 percent, reaching €6.5 million. Additionally, exports to Slovenia and the Czech Republic experienced declines of 25.4 percent and nearly 78 percent, respectively.
On the import side, China emerged as a leading supplier with goods worth €287 million, reflecting a rise of 10.6 percent. Other significant contributors included Germany at nearly €204 million, Greece at €132.8 million, Italy at €128.6 million, Croatia at €125.1 million, and Bosnia and Herzegovina at €105.5 million.
The current trade dynamics highlight Montenegro’s limited manufacturing capabilities and heavy reliance on foreign products such as vehicles, machinery, electrical equipment, fuel, pharmaceuticals, processed foods, and construction materials. A considerable portion of consumption linked to tourism and real estate also stems from imports due to domestic suppliers’ inability to meet demand adequately.
A trade deficit does not inherently indicate economic weakness; for instance, machinery imports can signify productive investments that may be accompanied by growth in service exports driven by tourism. However, concerns arise from the lack of growth in Montenegro’s merchandise-export capacity during this period, as manufacturing output remained largely stagnant while industrial production gains were mainly due to electricity generation.
The euroized economy of Montenegro lacks a national currency that could depreciate to enhance competitiveness; therefore, necessary adjustments must occur through improvements in productivity, investment strategies, operating costs, export quality, and the establishment of industries capable of competing in international markets. The trade figures from the first half of 2026 suggest that these adjustments have not yet reached a critical scale.
