Montenegro’s gross domestic product (GDP) increased in the first quarter of this year compared to the same period last year by 6.1 percent, mainly thanks to household consumption growth, the Statistical Office reported yesterday Monstat.
GDP for these three months amounted to 1.22 billion euros, while in the same period last year it was worth 1.03 billion. GDP had nominal growth of 18.2 percent, and when the effect of inflation is excluded, real growth was 6.1 percent.
Household consumption, as one of the components of GDP, amounted to 1.09 billion euros in this quarter and was 207 million euros, or 23 percent, higher than in the same period last year. This refers to the total spending made by citizens, whether Montenegrin citizens, tourists, or foreigners with temporary residence permits (residence permits).
This increase in consumption was influenced by higher wages and other incomes of citizens, an increase in the number of tourists and their spending, as well as an increase in the number of foreigners with residence permits, especially from Ukraine and Russia.
GDP also includes government consumption, which increased from 232 million to 259 million, or 11.6 percent, over these comparable periods. Government spending on public projects grew at the level of inflationary impact, so it did not affect real growth.
Gross fixed capital investment in the economy rose from 253 to 286 million euros, which represents an increase of 13 percent and exceeds the inflationary effect only by a partial percentage.
The item that in Montenegrin circumstances almost always has a negative impact on GDP is the balance between imports and exports of goods and services. This balance was negative by 430 million euros over these three months, while in the same period last year the loss was 334 million euros. So the negative effect of this item increased by 28 percent.
Exports of goods and services amounted to 666 million dollars and increased by 178 million dollars, while imports rose by 273 million to 1.09 billion dollars. The reasons for the growth of this negative effect are increased imports of general consumer goods, such as food by 30 percent, cars by 74 percent, beverages and tobacco products by 57 percent, petroleum products by 18 percent, clothing by 38 percent, and footwear by 67 percent.
Since exports of goods and services also include foreign tourists’ spending, this balance will be positive only during the third quarter (July, August, September), when it is a good tourist year.
Minister of Economic Development and Tourism Goran Đurović wrote yesterday on his Twitter account that growth of “an incredible 6.1 percent is an indicator of the work of the Government of Montenegro and proof that this country is on the right path”.
Recall that earlier the International Monetary Fund (IMF) improved the forecast for Montenegro’s economy. According to its forecasts, the country’s economy was expected to strengthen by 9% in 2021.
Montenegro in second place by GDP growth rate
Yesterday Monstat also published a Eurostat table according to which Montenegro is in second place by GDP growth rate, while Iceland is in first place with growth of 7.1 percent.
Eurostat keeps these data for the 27 member states, as well as for seven candidates and other European countries that have adapted their statistical data to its standards.
Iceland and Montenegro are followed by Spain with growth of 4.1%, Turkey with four percent, Cyprus with 3.4%, Malta with 3.1%, Norway with three, Croatia and Denmark with 2.8% each. The average growth in EU member states was 1.1 percent.
As many as eight countries had negative growth, that is, an economic decline in this quarter. These are Estonia with minus 3.2 percent, Lithuania with 2.5 percent, Hungary with 0.9 percent, Germany and Ireland with minus 0.2 percent, as well as Poland, the Czech Republic and Finland, whose economic decline was 0.1 percent.
Among the countries of the region, after Montenegro, Croatia showed the highest growth — 2.8 percent, followed by North Macedonia — 2.1 percent and Slovenia and Serbia — 0.7 percent each. Bosnia and Herzegovina, Albania and Kosovo are not included in Eurostat’s lists.