Montenegro Faces Growing Trade Deficit Amid Economic Challenges

Montenegro’s economy is grappling with escalating challenges as data from the Statistical Office of Montenegro (Monstat) reveals a troubling increase in the trade deficit. From January to August 2025, the deficit reached a staggering level, with exports amounting to just €365.7 million while imports soared to over €2.88 billion. This represents a 4.6 percent decline in exports compared to the previous year, while imports rose by 6.5 percent. The coverage of imports by exports has plummeted to a mere 12.7 percent, down from 14.2 percent last year.

The economic situation has prompted criticism from political leaders, notably Mirza Krnić of the Preokret Movement. He attributes the dire statistics to what he describes as “poor planning and economic experiments” by the government. Krnić highlights that the inflation rate, which stood at 4.6 percent in August, further erodes the living standards of citizens. He argues that instead of fostering production and enhancing competitiveness, the government burdens the economy and citizens with increased debt and expenditures for an oversized administration.

Critique of Government Policies

Krnić insists that the data reflects a predictable outcome of the government’s inadequate economic planning. “Aside from a poor trade balance, we must not forget the high inflation rate, which exacerbates the problem,” he stated. He contends that the government benefits from high prices as it collects more taxes, yet this short-sighted approach undermines economic development.

He criticizes government strategies, stating that they focus on extracting more from the economy and citizens to finance consumption rather than supporting developmental projects. “The government plans to issue bonds to citizens, financing inefficient administration instead of development,” Krnić added. He emphasizes the paradox where the state, rather than solving economic issues, deepens them while seeking assistance from the very economy it neglects.

Krnić also points out Montenegro’s reliance on imports, noting that little has been done to address this dependency. “In two years, the coverage of imports by exports has decreased from 19.8 percent to 15.1 percent,” he explained. The current situation worsens due to the temporary closure of the Thermal Power Plant, the influence of import lobbies, and a lack of vision for boosting production and real economic growth.

Need for Strategic Reforms

He argues that rising costs outpace wage increases, a consequence of raising salaries without corresponding productivity gains. “This year, a larger deficit was anticipated, and with the current government policies, we cannot expect improvements,” Krnić remarked. He believes the government primarily exports electricity and raw materials, with little else of significant value.

Krnić advocates for reforms in tax and excise policies to stabilize prices, enhance control over large retail chains, and mitigate the adverse effects of import lobbies on domestic products. He calls for the competition authority to fulfill its intended purpose by preventing collusive practices among major capital players.

“In areas lacking genuine free competition, any discourse on a liberal economy loses meaning,” he noted, arguing for state involvement in establishing commodity reserves and mandatory buyouts. He emphasizes the need to promote domestic products and assist local producers in branding and accessing foreign markets.

“There is a need for a shift in state governance, economic policy, and future planning,” Krnić asserted. He believes that fostering economic patriotism through various incentives could lead to collective benefits for citizens.

Krnić concludes that by boosting domestic production, Montenegro can reduce imports and increase exports, which would positively impact employment, productivity, and competitiveness, ultimately leading to lower prices. He advocates for a better balance between work and productivity, stressing that true progress requires diligent efforts, commitment, and a revitalized economy.

According to Monstat, the structure of exports, based on the Standard International Trade Classification (SITC), shows mineral fuels and lubricants leading at €96.9 million, primarily from electricity, which accounted for €73.1 million. In terms of imports, machinery and transport equipment topped the list at €699.2 million, with road vehicles representing €275.5 million.

Montenegro’s primary trading partners for exports included Serbia at €97.7 million, Bosnia and Herzegovina at €31.8 million, and Slovenia at €27.5 million. For imports, Serbia again led at €502.2 million, followed by China at €350.7 million and Germany at €287.6 million. The trade exchange was most substantial with CEFTA signatories and the European Union.