Macroeconomic Forecast Montenegro

July 2007 | Macroeconomic Forecasts

According to preliminary data published by the Central Bank of Montenegro, the current account deficit came in at EUR175.8mn in Q107, which marked a significant increase from EUR131.7mn in Q106. The deteriorating current account balance is mainly due to surging import growth, rising by 31.2% y-o-y in Q107, which is fuelled by soaring private consumption and investment. According to the latest figures, we forecast that the year-end shortfall will increase to EUR670mn, or a staggering 38.6% of GDP. While we believe that these deficit levels are unsustainable in the longer term, ongoing strong FDI inflows (amounting to EUR195.mn in Q107) are likely to continue financing the gap for the remainder of 2007.

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