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Kosovo and Montenegro Country Risk Report Q2 2019

Kosovo and Montenegro Country Risk Report Q2 2019

Key View:

We at Fitch Solutions believe that bilateral relations between Kosovo and Serbia will remain cool over the coming years as they continue to hold fundamentally different views regarding the sovereignty of Kosovo. Kosovo is likely to strongly reject any ideas that would seek to divide the country, which will therefore keep the country's short- and long-term political risk score weak at 39.4 and 53.5 (out of 100) respectively.

Even though at Fitch Solutions, we are lowering our real GDP growth projections for Kosovo to 3.9% in 2018 and 3.7% in 2019 (from 4.2% and 4.0% previously), these still represents rather robust expansion versus the average of 3.3% in the past five years. Investment will continue to be the key engine of growth over the coming quarters, but weakening external demand due to a slowdown in European growth will be a modest drag.

Key Risks

Less favourable external economic conditions could stem the flow of remittances and dry foreign direct investment inflows – both of which are key lifelines for Kosovo's economy. This could lead to growing unemployment, which already stands at around 30%, and social unrest, which in turn could exacerbate divisions among the population along ethnic and/or religious lines. A strong international military and diplomatic presence would prevent an escalation of violence, but the country's bid towards progressive political normalisation would face another blow.fitchsolutions.com


Brief Methodology
Kosovo – Executive Summary
Core Views
Key Risks
Kosovo – Country Risk Summary
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Kosovo To Register Robust Expansion In 2019 Despite Slowing Growth In The Eurozone
GDP By Expenditure Outlook
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: PUBLIC CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: GDP GROWTH FORECASTS
10-Year Forecast
The Kosovar Economy To 2028
Economy To Remain Least Developed In Region
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Kosovo-Serbia Relations To Remain Tense Amid Continued Tariffs
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Political Future Far From Certain Despite Serb Agreement
Montenegro – Executive Summary
Core Views
Key Risks
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsMontenegro – Country Risk Summary
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Weaker Montenegrin Growth In 2019 Amid Softer Investment And External Challenges
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
10-Year Forecast
The Montenegrin Economy To 2028
BE Reforms Crucial For Convergence
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Montenegro's Ruling DPS To Push Forward With Further Reforms In 2019
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Converging Towards The EU
Operational Risk
South East Europe
TABLE: LABOUR MARKET RISK
TABLE: LOGISTICS RISK
TABLE: TRADE AND INVESTMENT RISK
TABLE: CRIME AND SECURITY RISK
Global Macro Outlook
Downside Risks To Global Growth
TABLE: GLOBAL FORECASTS (2018-2023)
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: KOSOVO – MACROECONOMIC DATA AND FORECASTS
TABLE: MONTENEGRO – MACROECONOMIC DATA AND FORECASTS

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