Montenegro's 2013 GDP growth could range between zero and 3% - chief economist.

By bne IntelliNews January 9, 2013
The chief economist of the Montenegrin central bank, Nikola Fabris, said he sees the economic growth ranging between zero and 3% this year, Portalanalitika reported, quoting him as saying in an interview to news agency Mina. Fabris, however, underlined this is his personal projection, while the official estimate of the central bank will be issued soon in its annual report. He also said that so early in the year it is not possible to make a reliable projection about how much the GDP will expand. Yet, its dynamics will inevitably impact the execution of this year's fiscal plan, therefore Fabris considers a fiscal adjustment might be needed later on, encouraging the government not to restrain from it. Still, according to him the government's budget deficit target of 2.73%/GDP for 2013 is acceptable in the current environment and in line with the Maastricht criteria. If the fiscal projections are met, there will be no need to raise the VAT rate from current 17%. According to Fabris, the low VAT rate is Montenegro's potential reserve in case of lower revenue. The government has adopted this year's budget based on expectations for a 2.5% economic growth. The budget is based on continuation of the fiscal consolidation by reducing budget expenditures and increasing tax revenue through measures for combating the gray economy and widening of tax base. Budget revenue is planned at EUR 1,162mn, equal to 33.26% of the projected GDP, while expenditures are projected at EUR 1,257mn, or 35.99% of GDP. According to Fabris, last year's economic growth (estimated by the government at 0.5%) was supported by significant increases in the tourism and trade sectors, as well as by a high inflow of foreign direct investment. Preliminary data show that Montenegro attracted EUR 421.5mn in FDI in the first eleven months, up 15% y/y, which is close to the inflows in the expansion period, Fabris said. On the other hand, many sectors like industry, construction, forestry and some types of transport have been facing severe problems through the year, he added.
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