Economy of Montenegro

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Economy of Montenegro
Podgorica National bank of Montenegro.JPG
CurrencyEuro (EUR)
Calendar year
Trade organisations
Country group
PopulationDecrease 622,182 (1 January 2019)[3]
  • Increase $5.457 billion (nominal, 2018)[4]
  • Increase $11.940 billion (PPP, 2018)[4]
GDP rank
GDP growth
  • 2.9% (2016) 4.7% (2017)
  • 4.9% (2018e) 3.0% (2019f)[5]
GDP per capita
  • Increase $8,763 (nominal, 2018)[4]
  • Increase $19,172 (PPP, 2018)[4]
GDP per capita rank
GDP by sector
Agriculture: 7.5%
2.604% (2018)[4]
Population below poverty line
  • 8.6% (2013 est.)[6]
  • Positive decrease 4.8% on less than $5.50/day (2014)[7]
Positive decrease 31.9 medium (2014, World Bank)[8]
Labour force
  • Decrease 257,905 (2018)[11]
  • Increase 59.8% employment rate (2018)[12]
Labour force by occupation
UnemploymentPositive decrease 16.1% (2017 est.)[6]
Average gross salary
€769 / $862 monthly (November, 2018)
€512 / $574 monthly (November, 2018)
Main industries
steelmaking, aluminum, agricultural processing, consumer goods, tourism
Decrease 50th (2019)[13]
ExportsIncrease $422.2 million (2017 est.)[6]
Export goods
Main export partners
ImportsIncrease $2.618 billion (2017 est.)[6]
Import goods
Food,oil products,natural gas,clothes,industrial products.
Main import partners
FDI stock
  • Decrease $737.7 million (31 December 2017 est.)[6]
  • Decrease Abroad: $39.77 million (31 December 2017 est.)[6]
Negative increase −$780 million (2017 est.)[6]
Negative increase $2.516 billion (31 December 2017 est.)[6]
Public finances
Negative increase 67.2% of GDP (2017 est.)[6][note 1]
−5.6% (of GDP) (2017 est.)[6]
Revenues1.78 billion (2017 est.)[6]
Expenses2.05 billion (2017 est.)[6]
Standard & Poor's:[16]
BB+ (Domestic)
BB (Foreign)
BB+ (T&C Assessment)
Outlook: Negative[17]
Outlook: Negative
Foreign reserves
Increase $1.077 billion (31 December 2017 est.)[6]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Montenegro is mostly a service based economy, currently in the process of economic transition. The economy of this small Balkan state is recovering from the impact of the Yugoslav Wars, the decline of industry following the breakup of SFRY, and UN economic sanctions.


As a relatively small principality and kingdom, Montenegro made its first steps towards an industrial economy only at the turn of the 20th century. The causes for this relative delay lay in the small population, lack of raw materials, underdeveloped transport network and comparatively low rate of investment. However, this delay in industrialization had its positive effects - Montenegro survived as a specific ecological oasis.

The first factories were built in Montenegro in the first decade of the 20th century, followed by wood mills, an oil refinery, a brewery, and electric power plants. This brief evolution of industrial economy was interrupted by new wars - First Balkan War (1912–1913), followed by World War I and World War II. Between the two world wars, agriculture maintained its dominant position in the national economy, while the sole remaining industrial plants were wood mills, tobacco factories, breweries, and salt works.

SFR Yugoslavia era[edit]

The economy made major progress only after World War II, as Montenegro became part of the SFRY. In the period following World War II, Montenegro experienced a period of rapid urbanization and industrialization. An industrial sector based on electricity generation, steel, aluminum, coal mining, forestry and wood processing, textiles and tobacco manufacture was developed, while trade, international shipping, and particularly tourism became increasingly important by the late 1980s.


Due to its favourable geographical location (it had access to the Adriatic Sea and a water-link to Albania across Lake Skadar) Montenegro became a hub for smuggling activity. The entire Montenegrin industrial production had stopped, and the republic's main economic activity became the smuggling of user goods - especially those in short supply like petrol and cigarettes, both of which skyrocketed in price. It became a de facto legalized practice and it went on for years.

Divergence from Serbian unity[edit]

In 1997, Milo Đukanović took control over the ruling party DPS and began severing ties with Serbia. He blamed policies of Slobodan Milošević for the overall decline of the Montenegrin economy. Resurgent inflation led the Montenegrin government to "dollarize" the economy, adopting the German mark unilaterally, and insisting on taking more control over the country's economic fate. This eventually resulted in creation of Serbia and Montenegro, a loose union in which the Montenegrin government assumed predominant responsibility for its economic policies.

This was followed by implementation of faster and more efficient privatization, passing of reforming legislation, introduction of a VAT. When the German mark was replaced by the euro, the latter became Montenegro's legal tender despite objections from Brussels. The government established a medium-term plan of economic reforms, popularly referred to as "The Agenda".

Despite implementation of reform laws and privatization of most of publicly owned companies, the living standard of Montenegrins did not improve significantly during this period. The government, with Milo Ðukanović still as the Prime minister, blamed the slow progress on Serbia. Some arguments used to support this position were that foreign debt was higher in Serbia by one third, that unemployment was significantly lower in Montenegro. It was also argued that troublesome cooperation of Serbian government with the Hague war crime tribunal, ongoing Kosovo status process and general political turmoil in Serbia were hampering Montenegro's attractiveness to investors and delaying its progress towards full membership in European Union and NATO.

A referendum was held on May 21, 2006 in which the people of Montenegro voted by a slender majority in favour of Montenegrin independence from Serbia.


A ferry in Montenegro. September, 2018.

Following the independence referendum, Montenegro's economy has continued to transform into a more service-based one, with the proclaimed goal of becoming the elite tourist destination, and joining the European Union. Efforts have been made to attract the foreign investors into tourism greenfield investments, as well as in large infrastructure projects, both needed to facilitate the tourism development.

Montenegro has experienced a real estate boom in 2006 and 2007, with wealthy Russians, Britons and others buying property on Montenegrin coast. Montenegro received, as of 2008, more foreign investment per capita than any other nation in Europe. Due to foreign direct investment, the Montenegrin economy has been growing at a very fast pace in recent years. However, Late 2000s recession will inevitably slow down the growth, as the biggest greenfield investments (development of Velika Plaža, Ada Bojana, Buljarica, Jaz Beach, construction of Bar-Boljare motorway, new power plants) may be postponed. The recession is also hitting hard on Podgorica Aluminium Plant, built in 1969 and the biggest single contributor to GDP, and a major exporter.

In the first half of 2012, Montenegro exported goods (mostly metals) worth 182,3 million €, which is 14,6% less than the same period the preceding year. The major export partners were Croatia (47,2 million €), Serbia (36,8), Bosnia and Herzegovina and Hungary (12,7). The import (mostly food, oil and electrical energy) was 864,9 million €, which is 2,6% more than the same period the preceding year. The major import partners were Serbia (249,2 million €), Greece (73), Bosnia and Herzegovina (59,8).[18]

Banking sector of Montenegro is highly concentrated with high share of foreign capital. Banks in Montenegro usually operate as universal banks, providing retail and corporate banking products and services. During the recent years (2007-2016), the banks have been attracting deposits from both Montenegrin residents and non-residents. Most of the banks offer non-resident accounts, usually to both natural persons and legal entities.[19]


An income Tax rate of 9% is applied for monthly personal gross income below EUR 751 per month, and a tax rate of 11% was applied for income above EUR 751. In 2013 it was a 15% rate.[20] Additional income reported in the annual tax return is also subject to a flat 9% tax rate.[21]

See also[edit]


  1. ^ data cover general government debt, and includes debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment; debt instruments for the social funds are not sold at public auctions


  1. ^ "World Economic Outlook Database, April 2019". IMF.org. International Monetary Fund. Retrieved 29 September 2019.
  2. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  3. ^ "Population on 1 January". ec.europa.eu/eurostat. Eurostat. Retrieved 12 October 2019.
  4. ^ a b c d e "World Economic Outlook Database, October 2019". IMF.org. International Monetary Fund. Retrieved 16 October 2019.
  5. ^ "Europe and Central Asia Economic Update, Fall 2019 : Migration and Brain Drain p. 13" (PDF). openknowledge.worldbank.org. World Bank. Retrieved 12 October 2019.
  6. ^ a b c d e f g h i j k l m n o "The World Factbook". CIA.gov. Central Intelligence Agency. Retrieved 23 January 2019.
  7. ^ "Poverty headcount ratio at $5.50 a day (2011 PPP) (% of population) - Montenegro". data.worldbank.org. World Bank. Retrieved 12 October 2019.
  8. ^ "GINI index (World Bank estimate)". data.worldbank.org. World Bank. Retrieved 23 January 2019.
  9. ^ "Human Development Index 2018 Statistical Update". hdr.undp.org. United Nations Development Programme. Retrieved 27 June 2019.
  10. ^ "Inequality-adjusted Human Development Index". hdr.undp.org. United Nations Development Programme. Retrieved 27 June 2019.
  11. ^ "Labor force, total - Montenegro". data.worldbank.org. World Bank. Retrieved 12 October 2019.
  12. ^ "Employment rate by sex, age group 20-64". ec.europa.eu/eurostat. Eurostat. Retrieved 25 May 2019.
  13. ^ "Ease of Doing Business in Montenegro". Doingbusiness.org. Retrieved 2017-01-23.
  14. ^ "Export Partners of Montenegro". CIA World Factbook. 2012. Retrieved 2013-06-21.
  15. ^ "Import Partners of Montenegro". CIA World Factbook. 2012. Retrieved 2013-07-24.
  16. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  17. ^ a b Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 31 May 2011.
  18. ^ B92, Crna Gora najviše uvozi iz Srbije, 26.07.2012
  19. ^ Offshore Banking in Montenegro
  20. ^ https://web.archive.org/web/20131203023417/http://www.mipa.co.me/page.php?id=7
  21. ^ https://home.kpmg.com/xx/en/home/insights/2015/11/montenegro-income-tax.html

External links[edit]