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Montenegro Country Report - November, 2015

  • December 2015
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 27 pages

This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of November 6-December 5, 2015.

NATO invited Montenegro to begin accession talks on December 2, a move that has already drawn an angry reaction from Moscow. If Montenegro calls a referendum asking its citizens whether they would support the country's joining to NATO, 56% would vote positively, while 44% would not support it, according to a poll conducted by Ipsos Strategic Marketing agency.

In its latest report, the EC noted that Montenegro has achieved some level of preparation in terms of fight against corruption and organized crime, but needs to further improve it.

The Delegation of the European Union to Montenegro said that the total indicative amount of EU financial assistance allocated to the country by 2020 is EUR324mn.

Standard & Poor's said on November 13 it has affirmed Montenegro's B+/B long-term and short-term foreign and local currency ratings with stable outlook on expectations for strong economic growth of an average 3.2% per year in 2015-2018, supported by increased investment activity.

Montenegro's government said it has decided to lower the so-called crisis tax on higher personal incomes in 2016 from 13% to 12%, aiming to ease the burden on private companies.



Key points:



o The budget deficit increased more than three times y/y to EUR253.2mn in the first ten months of 2015 o The number of foreign tourists visiting Montenegro increased by 4.6% y/y to 41,880 in October

o Industrial output swung to 12.4% y/y growth in October

o Bank assets rose 14% y/y to EUR3.52bn at end-October

Table Of Contents

Montenegro Country Report - November, 2015
EXECUTIVE SUMMARY3

REAL SECTOR4

1.GDP4

EBRD keeps Montenegro's 2015 GDP growth forecast at 3.0%4

EC lifts Montenegro's 2015 GDP growth forecast to 4.0% on tourism growth, key motorway project launch4

2.Inflation6

Montenegro's PPI inflation stays flat y/y in October6

Montenegro's CPI inflation slows further to 1.5% y/y in October6

Montenegro's HICP inflation slows to 1.9% y/y in October7

3.Industry and Trade8

Montenegro's retail sales growth slows to 3.0% y/y in September8

Montenegro's industrial output turns to 12.4% y/y growth in October8

Montenegro's industrial sales shrink 8.2% y/y in October9

4.Labour Market9

Montenegro's unemployment rate rises to 15.63% as of November 2 - employment agency9

Montenegro's monthly average net wage flattens y/y in October10

5.Tourism10

Foreign tourist arrivals to Montenegro rise 4.6% y/y in October10

FISCAL SECTOR11

Montenegro's government adopts 2016 budget, eyes 7.15% deficit11

Montenegro's January-October budget gap jumps more than three times y/y to EUR253.2mn on high spending12

FINANCIAL INTERMEDIATION12

Montenegro's bank deposits growth boosts to 18.1% y/y in October12

Montenegro's bank assets growth rises further to 14% y/y in October13

Average lending interest rate in Montenegro falls to 7.76% in October14

Mandatory reserves of Montenegrin banks rise 13.9% ytd to EUR244.8mn at end-October14

Montenegro's NPL ratio rise to 13.9% in October - c-bank14

Montenegrin banks factor EUR750mn bad loans since 2006 - c-bank15

EXTERNAL SECTOR15

Montenegro's net FDI inflow jumps two times y/y through September15

Montenegro's current account gap contracts 27% y/y to EUR207.6mn through September16

Montenegro's trade gap widens 7.2% y/y through October16

Montenegro's c-bank seeks changes in GHF loan conversion law17

STRUCTURAL REFORMS AND CORPORATE NEWS17

EU to provide up to EUR324mn financial assistance to Montenegro by 202017

Montenegro's government lowers crisis tax as of 201618

SandP affirms Montenegro's B+/B ratings on expected 3.2% GDP growth in 2015-201818

EC approves EUR57mn funds for cross-border cooperation between Croatia, Bosnia and Montenegro19

China's Pacific Construction to build Albania-Montenegro motorway for $1.72bn19

POLITICS20

Montenegro prosecutors accuse opposition leaders of coup attempt20

Majority of Montenegrins support joining to NATO - poll21

EC urges Montenegro to improve fight against organized crime, freedom of media21

Montenegro's opposition DF anti-government protests lose support22

Support for Montenegro's opposition DF anti-govt protests to fall further - analyst23

Montenegro's govt to file defamation claim against one of opposition DF's leaders24

Russia's State Duma warns Montenegro not to join NATO24

Nearly 50% of Montenegrins support joining NATO - poll25

Nato angers Russia with invitation to Montenegro25

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