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Montenegro Country Report - September, 2016

  • October 2016
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 33 pages

This report covers the main macroeconomic releases from September 1 until September 30, 2016 as well as the financial and political events that took place in Montenegro during this period.

Montenegro’s economic growth should remain stable at 3.2% in 2016, the same as last year, according to the World Bank’s latest Southeast Europe Regular Economic Report (SEERER), issued on September 27.
Three opposition parties in Montenegro - the Socialist People's Party (SNP), a party newly established by the former leader of the Democratic Front, Demos led by Miodrag Lekic and Reform Action (URA) - have agreed to run jointly in the October 16 general elections.

Montenegro’s ruling Democratic Party of Socialists (DPS) will not form a coalition with a new partner in advance of the October 16 general election. However, the DPS said it would include two representatives of its long-term coalition member, the Liberal Party (LP), on its list of parliamentary candidates, as in previous elections.

Montenegro will discuss a new loan worth mn for 2017 with representatives of the World Bank at the annual meetings of the International Monetary Fund (IMF) in October.
Montenegro’s tourism revenue is expected to exceed €1.5bn per year by 2026, according to the country’s Tourism Minister Branimir Gvozdenovic.
Montenegro’s President Filip Vujanovic has signed into law amendments to the law on conversion of Swiss franc loans to euro. Meanwhile, the Montenegrin arm of Addiko Bank (formerly Hypo Alpe-Adria Bank) said it will resort to international arbitration over amendments to the law on the conversion of Swiss franc loans.


Key points:
- CPI deflation softened to 0.5% y/y in August
- The working-day adjusted industrial production increased 8.1% y/y in August
- The foreign trade gap widened by 12.9% y/y to over €1bn in the first seven months of 2016

Table Of Contents

Montenegro Country Report - September, 2016
Table of Contents

1. EXECUTIVE SUMMARY 5
2. POLITICS 6
Three Montenegrin opposition parties form coalition ahead of general elections 6
Montenegro's ruling DPS says will not attract new coalition partner for October general election 6
Montenegro's high court accepts second deal with former President Marovic on Budva affair 7
Montenegro's anti-corruption body launches proceedings against main opposition parties 8
3. MACROECONOMIC OVERVIEW 9
Montenegro to seek to borrow mn from the World Bank for 2017 9
4. REAL SECTOR 10
4.1. GDP, forecasts 10
Montenegro's economy to grow 3.2% in 2016, World Bank says 10
Montenegro's GDP growth speeds up to 2.7% y/y in second quarter 11
Montenegro's GDP growth accelerates to 3.4% in 2015 - final figures 11
4.2. Inflation 12
Montenegro's PPI turns to fall in August 12
Montenegro's consumer price deflation cools to 0.5% y/y in August 13
Montenegro's HICP flattens y/y in August 13
4.3. Industry and trade 14
4.3.1. Industrial production 14
Montenegro's industrial sales rise 1.7% y/y in August 14
Montenegro's industrial output rises 8.1% y/y in August 14
4.4. Labour and retail 15
4.4.1. Unemployment and wages 15
Montenegro's unemployment rate rises to 17.7% 15
Montenegro's unemployment rate falls to 17.5% in Q2, Labour Force Survey shows 15
Montenegro's monthly average net wage grows 5.2% y/y in August 16
4.4.2. Retail 16
Montenegro's retail sales grow by 2.6% y/y in July 16
5. EXTERNAL SECTOR AND TRADE 17
5.1. Balance of payments 17
Montenegro's H1 current account gap widens 35.7% y/y to €661.6mn 17
5.2. Trade 18
Montenegro's 7-mo trade gap widens 12.9% y/y 18
5.3. Foreign direct investment (FDI) 18
Montenegro's net FDI down 46.1% in January-July 18
5.4. External debt 19
Montenegro's public debt reaches 60.6% of GDP at end-June 19
6. PUBLIC SECTOR 20
6.1. Budget 20
Montenegro's 7-mo budget gap shrinks 58.7% y/y to €108.4mn 20
Montenegro will not need budget revision, Deputy PM Lazovic says 20
7. FINANCIAL SECTOR AND CAPITAL MARKETS 21
7.1. Banking system 21
Montenegro's bank assets growth slows to 6.6% y/y in August 21
Montenegro's bank deposits growth slows to 7.8% y/y in August 22
Average lending interest rate in Montenegro falls to 7.48% in August 23
7.2. Stock market 23
Montenegro Stock Exchange turnover more than doubles y/y in August 23
7.3. Credit ratings 24
Moody's downgrades Montenegro's rating to B1 on negative outlook, SandP revises outlook to negative 24
8. INDUSTRY AND SECTOR NEWS 25
Montenegro expects tourism revenue to exceed €1.5bn a year by 2026 25
Montenegro's President Vujanovic approves amendments to CHF loan conversion bill 26
Montenegro issues radio frequency licences to three mobile operators 26
9. MAJOR CORPORATE NEWS 27
Addiko Bank to seek international arbitration over Montenegro's CHF loan conversion bill 27
Eni-Novatek starts offshore oil, gas exploration in Montenegro 28
€100mn to be invested in Montenegro's Lustica Bay resort by spring 2018 29
Montenegro's EPCG inks deal with Skoda Praha on new power plant unit 30
10. MISC 31
Human rights organisations protest against detention of Montenegrin journalist 31

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