Montenegro's GDP grew by a real 4.0% y/y in July-September 2013, accelerating from a 3.4% real growth in the second quarter of the year and a 1.1% GDP expansion in the first quarter, the statistics office said on Dec 19, quoting preliminary data.

In January-September, the Montenegrin economy expanded by 3.1% in real terms, the statement read.

The head of the statistics office, Gordana Radojevic, told a news conference in Podgorica that the positive economic growth in the third quarter was generated by the increase in the sectors of agriculture, tourism, manufacturing and trade, daily Vijesti reported. She added the strong economic performance had a significant influence on the labour market dynamics in the third quarter, adding the office’s employment survey showed the jobless rate touched its lowest level in the past three years of 17.8% in July-September 2013. 

The government expects the economy to expand by 2.6% this year after contracting 2.5% in 2012. The outlook overshoots the latest European Commission (1.9%), World Bank (1.8%) and EBRD (1.5%) growth projections for 2013.

IntelliNews Comment: We expect the recent mild recovery of the credit activity, which has been evident since the beginning of 2013 following a steady downward trend in the preceding two years (latest available), to support Montenegro’s GDP expansion this year. In addition, the metal sector activity could benefit from capacity investments in steel mill Zeljezara Niksic after its acquisition by Turkey's Toscelic in May 2012. Nonetheless reduced production of bankrupt aluminum producer KAP will continue to weigh on the sector. Budget austerity measures aimed to curb the rising fiscal gap, will remain a drag on the economic activity in the near term.