Intellinews Montenegro Country Report - July 2011

Additional Information

The economy is going through a mild recovery, according to Montenegrin authorities, but the monetary and financial sectors remain vulnerable. GDP recorded a 1.1% growth in H1, supported by growing manufacturing, tourism, construction, transport and agriculture. Domestic demand is also in an upsurge as indicated by rising retail sales - 17.3% y/y in June. The EBRD however revised down its growth forecast for the country to real 2.1% this year from 2.5% in its May projection due to negative annual private credit growth and fluctuating industrial production and exports.

The large amount of overdue loans and the respective provisions represent a serious impediment to banking assets growth. They however keep declining on an annual basis, in line with falling share of non-performing loans, which along with recovering lending activity suggests that the growth in bank assets might remain on the positive side in the current year.

The main political event was the failure of the parliament to reach an agreement on the amendments to the electoral law, which is ne of the seven key priorities before obtaining a positive recommendation for the EU integration talks of Montenegro. The deadline has therefore been extended to Dec 31, 2011.