Montenegro - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-10-06

Since regaining independence in 2006, Montenegro has adopted an investment framework to encourage growth, employment, and exports.  Although the continuing transition has not eliminated all structural barriers, the government recognizes the need to remove impediments, ensure business-friendly policies and improve transparency and open the economy to foreign investors.

Montenegro makes no distinction between domestic and foreign companies.  Foreign companies can own 100 percent of a domestic company, while profits and dividends can be repatriated without limitations or restrictions.  Exceptions to this policy are the small number of cases dealing with defense-related industries.

Montenegro’s government remains committed to membership in Euro-Atlantic institutions.  The country joined NATO in June 2017, and as a candidate country on its path to joining the European Union (EU), Montenegro opened all 33 chapters, while three chapters have already been provisionally closed. Montenegro offers foreign investors low, fixed tax rates, a business-oriented economy, significant economic freedom, a stable currency (Euro), and openness to incentivize investors. The Euro is the official currency in Montenegro, which stabilizes financial flows and results in lower transaction costs.  This is an informal arrangement with the European Central Bank, and Montenegro is not part of the Euro Zone.  Private ownership is protected by the Constitution and includes equal treatment of foreigners.  The IMF has cautioned Montenegro that its economic system is vulnerable to external shocks due to its high public debt-to-GDP ratio.  Montenegro’s public financial situation is relatively weak, with a debt-to-GDP ratio of 84.3 percent, with forecasts that it will increase absent fiscal consolidation.  One of the government’s priorities is to develop Montenegro’s infrastructure, including the second section of the country’s first highway that will better connect the developed southern part of the country with the relatively underdeveloped north.

The COVID-19 pandemic has impacted Montenegro’s economy significantly given its heavy reliance on tourism. While Montenegro’s economic growth rate in 2019 was one of the highest in Europe at 3.5 percent, the pandemic negatively affected Montenegro more than any other country in the region, causing a GDP decline of approximately 15 percent. According to World Bank estimates, the Montenegrin economy is expected to grow at a rate of 6.9 percent in 2021.  The unemployment rate increased from 15.3 in 2019 to 17.9 percent in 2020.

In August 2020, Montenegrins took to the polls and elected an opposition coalition, unseating the ruling Democratic Party of Socialists for the first time in 29 years. In one of its first major steps as a new government, in December 2020, the Ministry of Finance issued a €750 million bond on international markets to service maturing debt. At the end of 2020, the new government exercised its legal option to continue government operations under a temporary financing arrangement. On June 17, the parliament adopted the 2021 budget.

Montenegro attracts considerable interest from foreign investors. According to data released by the Montenegrin Investment Agency (MIA), EUR 10.9 billion have been invested in Montenegro since 2006 with a total FDI inflow in 2020 of EUR  663 million.  Monstat, the statistical office of Montenegro, reported in July 2021 that the number of active companies with foreign owners had declined 9.3 percent year on year.

No one country dominates foreign direct investments in Montenegro.  Significant investments have come from Italy, Hungary, Russia, China and Serbia, with new interest coming from the United Arab Emirates, Azerbaijan, Turkey, Ukraine and the United States.