Montenegro’s CA gap narrows 19% y/y to EUR 192mn in Q1 2013

By bne IntelliNews July 2, 2013

Montenegro’s current account gap shrank 18.8% y/y to EUR 192mn in January-March on the back of narrowing trade deficit and rising net income from abroad, central bank data showed.

Exports rose 6.3% y/y to EUR 95mn in Q1, partly reflecting a low prior year base, whereas imports contracted 9.0% to EUR 353mn over the period as domestic demand remains weak. The January-March foreign trade gap, thus, shrank 13.6% y/y to EUR 258mn, equalling to 7.4% of the full-year GDP projection.

The income account surplus jumped 51% y/y to EUR 33mn in Q1 also helping redress the CA gap. The January-March increase of net income was mainly driven by rising net compensations of employees (up 6.4% y/y to EUR 45mn) and lower net outflow of other investments (mainly interest payments on loans and other financial assets).

On the other hand, the Q1 net current transfers dropped 16% y/y to EUR 26mn, reflecting falling remittances inflow (down 8.3% to EUR 33mn).

The financial account surplus edged up 0.6% y/y to EUR 143mn in January-March on rising other investments. Net FDI recorded a mild 2.2% y/y drop to EUR 66mn in Q1. However, they covered 34% of the Q1 current account deficit, improving from 28.3% a year earlier.

Portfolio investments’ negative net balance widened to EUR 8.3mn from EUR 2.7mn a year earlier due to falling equity and debt securities investments of non-residents.

Montenegro's 2012 current account gap widened 2.4% to EUR 587.2mn after shrinking nearly 24.0% in 2011, mainly due to widening foreign trade deficit. 

Montenegro's balance of payments, EUR mn Q1'12 Q1'13 y/y,%
Current account -236.6 -192.2 -18.8
--trade gap -298.9 -258.3 -13.6
--services 9.0 6.6 -26.2
--income, net 22.0 33.2 51.0
--current transfers 31.3 26.3 -16.0
Capital account 1.0 -0.1 -106.3
Financial account 141.8 142.6 0.6
--FDI net 67.0 65.5 -2.2
--portfolio investments -2.7 -8.3 210.2
--other investments 63.5 68.9 8.5
Changes in resrve assets of the CBCG 14.1 16.6 17.7
Net errors and omissions 93.9 49.6 -47.1
Source: CBCG      

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