Montenegro Faces Growing Trade Deficit Amid Economic Concerns

Montenegro’s economy is grappling with significant challenges as it enters autumn, marked by an alarming rise in the trade deficit. According to data from the national statistical office, Monstat, the trade deficit from January to August 2025 reached a staggering €2.88 billion, with exports totaling only €365.7 million. The figures highlight a concerning trend: exports decreased by 4.6 percent compared to the same period last year, while imports increased by 6.5 percent. This has resulted in import coverage by exports plummeting to just 12.7 percent, down from 14.2 percent the previous year.

Mirza Krnić, a representative from the political movement Preokret, attributes these figures not merely to statistics but to the repercussions of “poor planning and economic experiments” undertaken by the government. He emphasizes that the inflation rate, which stood at 4.6 percent in August, is further eroding citizens’ living standards. Instead of focusing on boosting production and enhancing competitiveness, Krnić argues that the government is burdening the economy and its citizens with new debts and excessive spending on a bloated administration.

Economic Mismanagement and Rising Costs

Krnić points out that the recent data is a clear indication of the government’s inadequate economic planning. The combination of a deteriorating trade balance and rising inflation is creating a perfect storm for the economy. He asserts that high prices benefit the government as they yield increased tax revenues, yet this short-sighted approach fails to address the underlying issues affecting economic development.

“The government is primarily responsible for high prices,” Krnić stated. He elaborated that alongside import inflation, domestic inflation acts as a hidden tax due to the “Europe Now 1” program, with further complications arising from the subsequent “Europe Now 2” initiative. The authorities are perceived to be more focused on extracting more from businesses and citizens to fund consumption rather than investing in developmental projects.

He criticizes the government’s strategy of issuing bonds to citizens instead of seeking loans to finance development, arguing that this approach reflects a failure in managing the economy. “They have created a situation where we cannot borrow at favorable interest rates, and thus they turn to citizens and businesses for financing,” Krnić added, highlighting the paradox where the state exacerbates economic issues rather than solving them.

Dependence on Imports and the Need for Change

Montenegro’s heavy reliance on imports is another critical issue that Krnić stresses. He notes that in just two years, the coverage ratio of imports by exports has drastically declined from 19.8 percent to 15.1 percent, with current figures indicating an even more troubling trend. This decline correlates with the temporary shutdown of the Thermal Power Plant, the influence of import lobbies, and a lack of any clear vision to stimulate local production and productivity growth.

Costs are increasing at a pace that outstrips wage growth, a situation that is expected when salaries are raised without corresponding productivity gains. Krnić predicts that without a shift in government policy, the deficit will only worsen. He underscores the importance of promoting domestic products and establishing a framework for cooperative purchasing to support local producers.

“To truly foster economic patriotism, we need to encourage local production through subsidies and incentives,” he stated. Krnić believes that a focus on enhancing domestic production will not only reduce imports but also boost export capacity, consequently improving employment, productivity, and competitiveness.

He calls for a fundamental overhaul in the management of the state and economic policy planning. “The method of achieving prosperity through minimal effort has never worked; you cannot work less and expect better living standards,” he concluded, urging for a commitment to hard work and a revival of the economy.

Statistics from Monstat reveal that the primary exports based on the Standard International Trade Classification include mineral fuels and lubricants, valued at €96.9 million, which comprise electricity worth €73.1 million. In terms of imports, the highest figures are attributed to machinery and transport equipment, totaling €699.2 million, with road vehicles alone accounting for €275.5 million.

Montenegro’s largest trading partners for exports were Serbia (€97.7 million), Bosnia and Herzegovina (€31.8 million), and Slovenia (€27.5 million). The main import sources included Serbia (€502.2 million), China (€350.7 million), and Germany (€287.6 million). The trade exchange has been most significant with CEFTA signatories and the European Union.

As Montenegro navigates these economic challenges, the call for a strategic re-evaluation of trade policies and practices becomes increasingly urgent. The focus on enhancing local production and reducing dependency on imports could pave the way for more sustainable economic growth in the future.