A new report from the European Bank for Reconstruction and Development (EBRD) has shown that Montenegrin economy is growing rapidly and it is expected to reach 4% GDP growth during 2016 – the highest in Southeast Europe – which would be associated with major highway project funded by the Chinese.

Montenegro - economic growth
The EBRD announced that the economic growth of Montenegro had been accelerated to 3% in 2015, after disappointing results in 2014. According to the Bank, the tourism sector had a good performance in 2015, offsetting the decline in the number of Russian tourists by a large number of visitors from the region. However, the main problem in Montenegro is its fiscal side, which comes from the increase in public debt levels.
Generally speaking, outlooks for the economies in the countries where the EBRD invests remain divided, with countries further towards the east that are burdened by the Russian recession and lower prices of oil and other commodities.
According to the latest EBRD report on regional economic perspectives, growth in the whole region is expected to slow by 0.2% this year, compared to 1.8% in 2014. Moderate growth of 1.6% is expected in 2016.
According to the report, a slowdown in China sharper than expected, a larger than expected increase in interest rates in the United States, political instability and geopolitical tensions and uneven implementation of the programme to rescue the Greek economy represent risks.The report also shows that the refugee crisis that was sharply intensified in 2015 affects the economy in many countries.
Among the countries that are the most affected, it is estimated that Turkey will host several million refugees, whereas they make up nearly a fifth of the population in Jordan. When it comes to regions, the EBRD Report forecasts relatively strong prospects in Central Europe and the Baltic States, with the help of eurozone “quantitative easing” (QE) and lower commodity prices, thus providing scope for easier monetary conditions in the region.
“The expected average growth rate of about 3% in 2015 and 2016 enables continuous albeit slow rising of income levels towards those in developed economies,” the report stated.
Economies of Southeast Europe have also benefited from QE in Europe, the weaker euro and lower oil prices. It is generally expected that the growth would be continued in 2015 and maintained in 2016. However, when it comes to the Greek economy, growth reducing is expected both this and next year.
The economic situation in Eastern Europe and the Caucasus in 2015 deteriorated under the influence of recession in Russia and deeper recession in Ukraine and Belarus. However, it is expected that Ukraine will again show growth in 2016. The economy may touch the very bottom in mid-year and then to get on the path of gradual recovery. The IMF programme in Ukraine continues to be implemented as planned.
The growth in Turkey is expected to remain largely unchanged – 3% in 2015 and 2.8% in 2016, which is well below the long-term potential of the country. Weak domestic demand may be partly offset by the improvement in exports, as the recovery in the eurozone supports exports, whereas weaker domestic demand and lower commodity prices reduce imports.
Production in Russia is expected to be reduced by 4.2% in 2015 and 1.2% in 2016, following falling in consumption and real incomes due to significantly lower oil prices, structural problems and the effects of economic sanctions.
It is expected that the recession will be reduced in 2016 as the economy adjusts to lower oil prices and increased government spending provides additional stimulus. In Central Asia, the growth is expected to significantly slow down in 2015-16 compared to 2014 due to lower commodity prices and strong economic ties of the region with Russia.
In the region of the southern and eastern Mediterranean, forecasts for Egypt have been revised due to strong investment. The prospects of growth have been weakened in Tunisia due to deteriorating domestic conditions, whereas regional security problems are related to Jordan. A strong agricultural performance is expected to raise growth in Morocco to 4.9% in 2015. Slowing growth by 3.8% in 2016 has also been foreseen.

© 2018 PETROS STATHIS | ALL RIGHTS RESERVED.

Petros Stathis

STAY CONNECTED WITH US: