Montenegro's current account gap widened by 5.6% y/y to EUR 441.8mn in the first half of 2014 on the back of higher foreign trade deficit coupled with lower surpluses on the primary and secondary income accounts, data from the country’s central bank (CBCG) showed. The six-month current account gap equalled 12.6% of the full-year GDP projection, up from 11.8% a year earlier, according to IntelliNews calculations.

Exports dropped 20.1% y/y to EUR 161.5mn in the first six months of the year, while imports shrank 2.3% y/y to EUR 805mn over the period. The H1 foreign trade deficit worsened to 18.3% of GDP from 17.6% a year ago.

The H1 net primary income dropped 33.3% y/y to EUR 22.7mn due to higher outward direct and portfolio investment. The net secondary income declined 5.1% y/y to EUR 57.7mn. In contrast, the surplus on the services account rose 11.6% y/y to EUR 121.4mn, supported by higher tourism and construction proceeds.

The financial account surplus narrowed by 30.3% y/y to EUR 157.2mn in H1. Net FDI went up 5.5% y/y to EUR 163.7mn over the period thanks to higher investments in debt instruments.

Montenegro’s current account gap is expected to decline from 14.6% of GDP in 2013 to 14.4% in 2014 and to edge up to 14.5% in 2015, the EC said in its latest forecast. Its projection is more optimistic than the one by the IMF, which sees the shortfall rising to 17.9% of GDP in 2014 and further to 21.9% in 2015, before narrowing to 16.7% in 2016.