Montenegro: Economic and Political Overview
As the smallest country in the Balkans, Montenegro has a relatively fragile economy that is transitioning to a market system and is based on financial investments, especially in the energy and tourism sectors (private investment accounts for around one-fifth of GDP). After recovering from the COVID-19 crisis, the Montenegrin economy grew by 6% in 2023, driven by strong consumption, tourism revenues surpassing pre-pandemic levels, and an influx of relatively affluent Russian and Ukrainian nationals due to Russia’s war in Ukraine. The strong growth from 2023 continued into 2024, although GDP growth moderated to 3.4%, driven primarily by private consumption and investments. Economic growth is expected to accelerate in 2025, driven by newly adopted policy measures (i.e. the new Fiscal Strategy) which are likely to boost private consumption and investment. However, this impact is anticipated to moderate in 2026. Medium-term growth is expected to remain steady, supported by progress towards EU membership (World Bank).
Regarding public finances, Montenegro's budget shifted to a USD 239 million deficit in 2024, compared to a USD 11 million surplus in 2023 (Ministry of Finance data), representing 3.2% of GDP. Budget revenue for 2024 increased by 7.3% year-on-year but was 0.6% below the plan, reaching USD 2.955 billion, or 37.8% of GDP. Tax revenue amounted to USD 2.13 billion, up from USD 1.78 billion in the same period of 2023. Budget expenditures in 2024 totalled USD 3.22 billion, or 41% of GDP, a 16.8% increase from 2023, but 0.7% below the plan. Last year's capital budget totalled USD 270 million, up 33% compared to 2023. Going forward, the general government deficit is expected to widen due to the significant increase in minimum wages, regular pension indexation, and lower revenue from halving pension contributions. Meanwhile, Montenegro's total public debt rose by USD 471 million in 2024 to USD 4.933 billion, or 61.32% of GDP, due to new debt issuance needed to accumulate reserves and prepare for the large Eurobond repayment in 2025. The country's net public debt (excluding the finance ministry's deposits and gold reserves) stood at USD 4.49 billion at the end of 2024, or 56.15% of GDP. Montenegro's consumer price inflation decelerated to 2.1% at the end of last year from 4.3% at the end of 2023. In 2025, consumer prices are projected to rise due to significant increases in wages and social transfers. Inflation is expected to ease in 2026, assuming no changes in current policies. Montenegro officially submitted its application to join the EU on December 15, 2008, with membership negotiations commencing on June 29, 2012. As of 2025, all of the 33 negotiating chapters have been opened, six of which have been provisionally closed (including three at the end of 2024). As per the IMF recommendations, enhancing infrastructure connectivity, promoting tourism in the Northern region, and expanding into niche tourism markets can diversify Montenegro's tourism sectors. Moreover, harnessing its natural resources in hydro, solar, and wind power will boost energy production and exports, supporting the country's climate objectives. Improved public investment management practices are essential to prioritize high-return investments in both physical and digital infrastructure. Additionally, implementing effective policies to curb informality will foster a favourable environment for the SME sector, allowing it to capitalize on skilled migrant labour.
In September 2024, the National Assembly adopted the Fiscal Strategy and the Europe Now 2 Programme. The implementation of Europe Now 2 led to a significant increase in minimum wages to an average of EUR 700, up from EUR 450. Employment growth continued across all sectors in 2024, with the unemployment rate falling to 14.1% (data from the World Bank). Job growth is expected to accelerate in 2025 due to reduced pension contributions, though this effect may weaken in 2026 as rising wages could slow job creation in the services sector. The country maintains a large informal sector, while the labour force participation rate remains low. Moreover, Montenegro is one of the poorest countries in Europe: according to the latest data available by the OECD, approximately 20.1% of the population is at risk of poverty or social exclusion. The country’s GDP per capita was estimated at USD 31,858 in 2024 by the IMF, half of the EU average.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 7.41 | 8.11 | 8.85 | 9.43 | 9.90 |
| GDP (Constant Prices, Annual % Change) | 6.0 | 3.7 | 3.7 | 3.0 | 3.0 |
| GDP per Capita (USD) | 11,696 | 12,802 | 13,961 | 14,873 | 15,597 |
| General Government Gross Debt (in % of GDP) | 61.5 | 62.2 | 59.5 | 62.1 | 62.5 |
| Inflation Rate (%) | 8.6 | 4.2 | 3.7 | 2.9 | 1.9 |
| Current Account (billions USD) | -0.86 | -1.18 | -1.24 | -1.29 | -1.35 |
| Current Account (in % of GDP) | -11.6 | -14.5 | -14.0 | -13.7 | -13.6 |
Source: IMF – World Economic Outlook Database, October 2021
Montenegro has a labour force of 241,500 people out of its 616,000 population. Agriculture, which according to the latest data from the World Bank represents 5.5% of the GDP (roughly 60% livestock breeding and 40% cultivation) and 6% of the workforce, remains hampered by its outdated methods. Agricultural land accounts for 19% of the total land area (FAO) and the sector is dominated by small-scale family farms, with the average farm size being less than 5 hectares. Based on the preliminary results of the 2024 Census of Agriculture, Montenegro had a total of 26,711 agricultural holdings. These holdings utilised 248,234.2 hectares of agricultural land in 2024. In the coastal region which benefits from the Mediterranean climate, citrus and olive cultures are widespread, seasonable vegetables and tobacco can be found in the central parts, and the North benefits from the extensive sheep breeding. The main products exported are wine and beer, though the increased focus on tourism over the past decade has contributed to the waning of agriculture, increasing the country’s reliance on food imports. As Montenegro advances in the negotiations to join the EU, the country is working on the improvement of its agricultural sector as one of the EU pre-accession requirements.
Industry represents 12.5% of the country's GDP and employs 16.1% of the workforce. Its contribution to the economy has been declining in recent years. The steel and aluminium industry alone represents a good part of the country's exports and is expected to boost economic development. The manufacturing sector is still underdeveloped and accounts for only 3% of GDP. According to the National Statistical Institute, Montenegro's industrial output increased by 0.2% in 2024 as the mining sector's production rose by 8.9% last year, while manufacturing output grew by 11.9%. In contrast, the utilities sector saw a decline of 15.1% compared to 2023. Meanwhile, industrial sales grew by 3%, marking a slowdown from the 5.6% increase recorded one year earlier.
The tertiary sector contributes 62.2% to the GDP and employs almost three-quarters of the workforce (77.8%). Tourism is the third-largest industry and consumes around one-third of total investment. It alone provides 20% of the GDP (EU Commission). The sector has been in full expansion in recent years, especially on the Adriatic Coast: every year Montenegro welcomes three times as many visitors as its total population. In 2024, there were a total of 2,606,854 tourist arrivals and 15,594,299 overnight stays. Of the overall overnight stays, 96.1% were accounted for by foreign tourists, while domestic tourists contributed 3.9% of the total overnight stays (data Monstat). The country is seeking to improve its tourism infrastructure and develop its eco-tourism industry to exceed 30% of GDP by 2027 while trying to attract large foreign hotel chains that may provide hospitality standards similar to those in Europe. On the other hand, the country is also seeking to diversify its economy to be less dependent on tourism. Montenegro's banking sector is relatively small but growing rapidly. It has undergone significant reform in recent years, with the government implementing a number of measures aimed at improving financial stability and increasing competition. Banks dominate the market, accounting for over 90% of the total assets in the financial system.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 6.0 | 16.1 | 77.8 |
| Value Added (in % of GDP) | 5.5 | 12.5 | 62.2 |
| Value Added (Annual % Change) | -0.3 | 2.8 | 7.0 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
Find more information about your business sector on our service Market reports.
Find out all the exchange rates daily on our service International currency converter.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: May 2025
