Government adopts economic analysis for 2011 and first quarter of 2012

Podgorica, Montenegro (18 May 2012) – At yesterday’s session, the Government adopted the economic analysis for 2011 and the first quarter of 2012.

In 2011, the economy increased at a rate of 2.5%. The main generator of that growth was tourism (an increase of 10.2%), which affected the growth in all other service sectors.

This period was marked by the increased production of base metals at a rate of 18% and it had a positive impact on the export which increased by 34%. The economic activities affected the import to increase at a rate of 10% in 2011.

The export of services has risen at a rate of 13%, while the sufficit in terms of services was EUR 530 million or 15% of GDP. These activities affected the drop in deficit on services current account by 19% compared to 51% of BDP in 2008.

The end of 2011 and the beginning of 2012 was marked by the drop in economic activity affected by the financial crisis in eurozone, social issues which caused the drop in production in Podgorica’s Aluminium Plant (KAP), severe weather conditions, as well as by the paid guarantees for the KAP’s debt to the Deutche Bank and illiquidity caused by the drop in loans activities and direct foreign investments (loans declined at a rate of 14% and investments declined at a rate of 30% compared to 2011).

The first quarter of 2012 was marked with negative economic activities, but the positive trends are expected during the year thanks to good tourist seasons prospects, some huge investments in tourism (Luštica, Plavi Horizonti, Porto Montenegro, Sveti Stefan) and the recovery of banks loan activities (an ncrease of 0.9% in March 2012 compared to December 2011).

The real growth forecast in 2012 has been revised lower to 0.5%, whereas the real growth is projected to increase at a rate of 1,5 in 2013, 3,5% in 2014 and 4% in 2015.

As to the fiscal projections, the overall situation affected the budget deficit to rise at a rate of 2.6% and consequently the state debt to increase to 50.1% of BDP in 2012. However, in 2013 the budget deficit is projected to drop by 1.6% and the state debt to drop from 49.3% in 2014 to 46.5% of BDP in 2014.