Country & Market Assessment

Country Independence
Montenegro became independent on 3 June 2006 following the holding of a referendum on independence. The European Union ("EU") on 12 June 2006 recognised the referendum result and announced that EU members would individually recognise Montenegro and establish diplomatic relations with it. Serbia recognised Montenegro as an independent state on 15 June 2006.

Montenegro became a member of the UN on 28 June 2006 and joined the European Bank for Reconstruction & Development on 6 September 2006, and the IMF and World Bank in January 2007.

Montenegro's political and consequential economic transformation over the last decade has been progressive and is expected to result in accession to the EU. This accession will likely to materially result in increase investment of capital into Montenegro real estate and the luxury tourism and leisure market.

Economic Performance & Outlook
Montenegro currently enjoys rapid economic growth and is observed to be one of the more compelling markets for investors looking for above average returns. The 2006-2007 year have seen a combination of a strong GDP growth of more than 6 per cent in 2006, coupled with low inflation and a significant inflow of foreign direct investment (more than US$ 1 billion over the two years combined). Fiscal performance has also improved and the country's level of external debt has been modest.

Key attributes of the Montenegrin economy include:

• Noted as one of the world's fastest growing tourism economy
• Political stability with a focus on disciplined fiscal policy

Strong economic fundamentals include:

• Controlled inflation
• Declining unemployment rates
• 2007 Average Inflation at 4.2%
• 2007 GDP Growth at 7.0%

Montenegro took the step of adopting the Euro in 2002 as sole legal tender which has contributed to significant economic stability. Montenegro has also made important advances in some dimensions, notably in the areas of price and trade liberalisation, privatisation and banking sector reform.
As a result of the significant progressive reforms adopted over the last two years, Montenegro enjoys significant funding and support from international bodies including the European Commission, EBRD, the US Aid and the World Bank. These organisations are facilitating with significant capital in developing the local infrastructure.

Standard and Poor assigned Montenegro its first rating in 2004 and currently provides a BB+ (Long-term) rating, Stable, 'B' (Short-term) Sovereign Credit Ratings and AAA for transfer and convertibility. These ratings reflect macroeconomic stability, steady economic growth, positive track record of legal and economic reforms, prudent fiscal policies and a stable and cohesive domestic political environment. Montenegro also has a rating from Moody's of Baa1. Montenegro presently has a better rating than neighbouring Serbia and Turkey.

It must be said that the recent economic slowdown has also impacted Montenegro. The Government predicts forecast of growth of 5% in 2009 (with a best case of 7%) is contrasted with recent IMF predictions for Montenegro to slow to 2% growth. Recent report by Business Monitor International (in their report covering Serbia and Montenegro) predicts the Montenegrin economy to contract by 4.2% in 2009 (down from previous forecast of a 2% expansion) with a small recovery of 1.2% expected in 2010.

The below depicts the key economic indicators for Montenegro from 2004 through to 2013 year forecast.

 

 

LATEST NEWS

Montenegro’s New Golden Era - Country Life28 July, 2009

Montenegro Could Be The New Riviera - The Daily Mail6 July, 2009

Russians Turn “Queen” into a Casino - visitmontenegro.com3 July, 2009