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Montenegro experiences more than 4% real GDP growth in first six months of 2017

Published date 28.07.2017 17:55 | Author PR Service

Ispis Print

Podgorica, Montenegro (28 July 2017) – Montenegro achieved good economic results in the first half of 2017. Based on the economic activity measured by the growth rate of GDP in the first quarter and available indicators for the second quarter, the Government's preliminary estimate is that real GDP growth for the six months of 2017 was above 4%, which is more than the annual projection. Economic growth in the first half of the year is based on strong investment activity and the growth of personal consumption and exports.

Strong economic growth in the first half of the year created new jobs. According to official data, in the first half of 2017, the number of employees in Montenegro increased by 6,758 persons or by 3.9% in relation to the same period last year, and it increased in the following sectors: mining and quarrying, manufacturing, energy, construction, trade, transport, tourism and catering. Furthermore, employment has increased in health and education, both in the private and public sectors.

Economic growth also affected further growth of the average net wage. In the first half of 2017, it amounted to 511 euros, the highest in the region. Regular adjustment of pensions was continued, which will be the case in the upcoming period as well, and for this purpose, by 2020, the Government will allocate an additional EUR 22.3 million.

Government’s efforts towards strengthening macroeconomic stability has contributed to the improvement of key macroeconomic indicators. Fiscal consolidation measures are aimed at strengthening fiscal stability, while preserving the development component of the budget, crucial for improving the living standard of citizens.

In addition to increasing formal employment, as one of the effects of the Government’s measures in terms of strengthening fiscal discipline and curbing the informal economy, the effects of fiscal consolidation are reflected in the increase in budget revenues in relation to last year and their achievement in relation to this year’s plan.

This was also contributed by the tax debt reprogramme, through which Montenegro collected about EUR 12 million of outstanding tax debt in the first half of the year, out of a total of EUR 178.6 million of debt that entered the reprogramme, dominated by the debt of small and medium-sized enterprises. Furthermore, due to the growth of budget revenues, we have contributed to the maintenance of liquidity and employment in the sector of small and medium-sized enterprises.

Total original budget revenues for the period January - June 2017 amounted to EUR 820.6 million and were above the plan and 8% higher compared to the comparative period of 2016.

Data on the execution of the central budget in the first half of 2017 show that in the observed period the budget deficit amounted to EUR 105.2 million or 2.7% of GDP, which is lower than the plan and in relation to the budget deficit in the same period of 2016. Budget revenues in the first half of 2017 amounted to EUR 682 million and are at the level of the plan, while budget expenditures amounted to EUR 787.1 million euros and are lower than planned.

Increased net inflow of foreign direct investment and strong overall investment activity in the country contributed to the improved economic performance and compensating the effects of consolidation on economic growth in the first half of the year. Net inflow of FDI in the first five months totalled EUR 176.7 million or 59.2% more than in the same period of 2016.

Observed by sectors, economic growth was contributed by the growth in agriculture, forestry, mining and quarrying sector, tourism, construction, trade, whereas further increase in production in the manufacturing industry is expected, which, after falling in the first quarter, has started to grow since April 2017 in comparison with the comparative period in 2016.