The EBRD revised up its 2013 GDP growth projection for Montenegro to 1.5% in the November edition of its Regional Economic prospects from 1.0% in the May report. The Bank sees the recovery strengthening to 2.0% in 2014, unchanged from the May forecast.
The EBRD outlook remains less optimistic than the government’s expectations for 2.7% GDP expansion in 2013. It is also below the latest EC projection for 1.9% growth this year but fully matches the IMF forecast.
Economic activity picked up in the first half of 2013 underpinned by recovering exports, the EBRD underscored. However, the country’s current account deficit remains among the region’s highest at nearly 20% of GDP. Montenegro’s fiscal position has weakened after the payment of EUR 103mn of state guarantees on aluminium producer KAP’s loans in August 2013.
The country's public debt has increased sharply in recent years, the EBRD also said. Despite some recovery of credit activity, evident since the start of the year, credit supply remains constrained by the high level of NPLs at close to one in five loans. The EBRD also said it expects the average inflation to slow to 2.6% in 2013 from 3.6% in 2012, likely reflecting low domestic demand.
Montenegro’s outlook will remain below the average for the SEE region in both 2013 and 2014 (of 1.6%and 2.2% respectively).
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