Montenegro Country Report - December, 2014

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Montenegro Country Report - December, 2014

This report covers the key macroeconomic and financial releases as well as the political events from Montenegro for the period of December 6, 2014 - January 5, 2015.
Montenegro’s GDP expanded by a real 1.3% y/y in the third quarter of 2014, speeding up from 0.3% y/y growth in the previous three months, according to preliminary statistics office data. The country’s consumer prices remained flat y/y in November after falling by 0.5% y/y in October due to a 1% annual increase of food prices.
Montenegro has signed three agreements with Germany’s development bank KfW for loans worth combined €40mn to be used for investments in energy efficiency. The country also signed a financial agreement with the European Union that would allow the country get €5.6mn for human resources development projects under the EU’s Instrument for Pre-Accession Assistance (IPA II).
Key points:

• Jan-Nov budget gap narrows 78.4% y/y to €25.34mn.
• Foreign tourist arrivals to Montenegro increase 12% y/y in November.
• Industrial output falls 19.8% y/y in November.
• Average lending interest rates in Montenegro fall to 9.9% in November.

Table of Contents

EXECUTIVE SUMMARY 2
REAL SECTOR 4
1. GDP 4
GDP growth speeds up to 1.3% y/y in Q3 4
2. Inflation 5
Consumer prices flatten y/y in November 5
EU harmonised deflation softens to 0.3% y/y in November 5
PPI inflation inches up to 1.1% y/y in November 6
3. Industry and Trade 7
Industrial output falls 19.8% y/y in November 7
Industrial sales inch up 0.4% y/y in November 7
Retail sales growth brakes to 0.1% y/y in October 7
Monthly average net wage falls 0.4% y/y in November 8
5. Tourism 9
Foreign tourist arrivals to Montenegro increase 12% y/y in November 9
FISCAL SECTOR 9
Jan-Nov budget gap narrows 78.4% y/y to €25.34mn 9
Montenegro sells €6mn of 182-day T-bills at lower yields 10
Public debt reaches €1.96bn at end-October 10
Montenegro to allow 30-day deferred customs duty payment in 2015 11
FINANCIAL INTERMEDIATION 11
Bank assets growth speeds up to 4.4% y/y at end-November 11
Bank deposits growth speeds up to 9.1% y/y in November 12
Average lending interest rates in Montenegro fall to 9.9% in November 12
Montenegro’s c-bank lowers limit on T-bill share in mandatory reserves to 35% 13
EXTERNAL SECTOR 13
Jan-Nov trade gap widens 2.4% y/y on lower exports 13
STRUCTURAL REFORMS AND CORPORATE NEWS 14
Montenegro receives €40mn loan from KfW for energy efficiency 14
Montenegro to get €5.6mn EU funding for HR projects 14
UAE’s Royal Group seeks to open or buy bank in Montenegro 14
Montenegro’s parliament approves construction of Bar-Boljare motorway 15
Turkey's Ziraat Bank to apply for licence in Montenegro within days – deputy PM Lazovic 15

Number of pages: 16
Release Date: Fri, 09 Jan 2015