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									                                                     EMBASSY OF INDIA

                                ECONOMIC AND COMMERCIAL REPORT FOR
                                   THE REPUBLIC OF MONTENEGRO

      1        Economic and Financial Indicators

                        Year                GDP in USD mill.              GDP Growth %
                 2005                           2,450.3                       4.2%
                 2006                           2,901.2                       8.6%
                 2007                            3618.6                      10.7%
                 2008                           4,165.6                       6.9%
                 2009                           4,162.1                      -5.3%
                Source: Statistical Office of the Republic of Montenegro, National Bank of Montenegro

Basic macroeconomic and fiscal indicators                                          2008                      2009
Gross domestic product, current prices, in Euro million                           3,085.6                  3,083.0
Gross domestic product, in billions USD apx.                                        4.17                     4.16
Gross domestic product, per capita, USD apx.                                      6,942.6                  6,636.8
Gross domestic product, real growth, in %                                          6.9 %                    -5.3%

Inflation                                                                          2008                     2009
Monthly Inflation                                                                  0.7 %                    0.1 %
Inflation rate – Consumer price index CPI (%)                                      7.1%                     1.5 %

Foreign trade, in million USD                                                       2008                     2009
  Total                                                                            3,996.4                  2,619.0
  Export of goods                                                                   584.8                    388.7
  Import of goods                                                                  3,411.5                  2,230.3
  Foreign trade deficit                                                           -2,826.7                 -1,841.6

Balance of Payment, in million USD                                                 2008                     2009
  Budget                                                                             -                     1.997.2
  Revenues                                                                           -                     1,596.8
  Privatization & Donations                                                          -                       400.4
Foreign direct investments, net in million USD                                    1,009.6                  1,442.3

Monetary and Foreign Exchange Indicators                                            2008                    2009
 Foreign currency reserves of CBMN, in million USD                                  292.4                   233.3
 Value of USD against Euro                                                           1.35                    1.35

Employment, wages and pension benefits                                              2008                February 2010
 Unemployment rate, (%)                                                            15.1 %                   14%
 Net wages, period average, in Euro.                                                 416                     463
 Net wages, period average , in USD                                                 561.6                   601.9
Net wages, real growth rates (%)                                                    23%                     7.2%
 Source: Statistical Office of the Republic of Montenegro, National Bank of Montenegro

        Figures in                           2005                2006                   2007            2008            2009
        USD 000.
Total Trade                          1,937.18             2,848.64            3,455.46          4,440.45           2,619.0
Export                                 621.92               847.07              657.59            584.82             388.67
Import                                1,315.1             2,001.63            2,797.88          3,855.63          2,230.34
Deficit                              -693.18             -1,154.56            2,140.29         -3,270.81          -1,841.67
Source: Statistical Office of the Republic of Montenegro, National Bank of Montenegro

Montenegrin Top 10 Export Partners :

Nr.         Country                    Export in   % Export
                                       USD 000.
            Total Export                 388,633.8     100%

1           Serbia                          107,468.6           27.7%
2           Greece                           64,517.8           16.6%
3           Italy                            46,193.6           11.9%
4           Slovenia                         32,527.7            8.4%
5           Bosnia                           25,490.0            6.6%
6           UNMIK /Kosovo                    21,976.5            5.7%
7           Hungary                          15,771.8            4.1%
8           Croatia                          13,269.3            3.4%
9           USA                               9,998.9            2.6%
10          Germany                           9,168.7            2.4%
Total       Top 10                          346,391.2           89.1%

Top 10 Export Products:

Nr.         Products                          Export in   % Exp.
                                              USD 000.
            Total Export                        388,633.8    100%

1           Aluminium                            153,819.1           39.6%
2           Steel & metal                         43,152.5           11.1%
3           Furnace & equipm.                     31,530.2            8.1%
4           Beverages & alcohol                   30,097.0            7.7%
5           Wood & Coal products                  18,271.0            4.7%
6           Pharmaceutical products               12,111.3            3.1%
7           Steel products                        10,639.5            2.7%
8           Mineral fuels & oils                  10,605.3            2.7%
9           Perfumes & Cosmetics                   6,167.3            1.6%
10          Vegetables                             5.003.1            1.3%
            Other                                                     17%

                                                                               Aluminium        Steel
         1%              17%
  2%                                                                           Furnaces         Beverage4s
 3%                                          39%
                                                                               Wood & Coal      Pharmaceuticals
       3% 5%
                 8%                   11%
                            8%                                                 Steel prod.      Mineral fuel

                                                                               Cosmetics        Vegetables


Montenegrin Top 10 Import Partners :

Nr.        Country                Import in    % Import
                                  USD 000.
           Total Import            2,230,429.2     100%

1          Serbia                       808,963.5              36.3%
2          Croatia                      170,744.0               7.7%
3          Bosnia                       155,234.3               7.0%
4          Slovenia                     155,001.7               7.0%
5          Italy                        146,579.4               6.6%
6          Greece                       144,460.1               6.5%
7          Austria                       89,803.0                 4%
8          Germany                       85,339.9               3.8%
9          Switzerland                   76,601.6               3.4%
10         Hungary                      42,312.78               1.9%
Total      Top 10                     1,875,161.6              84.1%

Top 10 Import Products:

Nr.        Products                               Export in      % Exp.
                                                  USD 000.
           Total Imports                         2,230,429.2        100%

1          Mineral fuels & oils                   281,994.8        12.6%
2          Furnaces & machinery                   161,987.6         7.3%
3          Electric machinery & equip.            158,097.6         7.1%
4          Vehicles and spare parts               120,723.4         5.4%
5          Meat products                           80,725.1         3.6%
6          Steel & metal products                  80,439.6         3.6%
7          Furniture & furnishings                 72,969.4         3.3%
8          Pharmaceutical products                 67,626.6         3.0%
9          Plastic mass                            65,980.4         2.9%
10         Beverages & alcohol                     62,810.8         2.8%
           Other                                                   48.4%

                                                                Mineral fuels    Furnaces
                           13%              7%                  Electric Mach.   Vehicles
     48%                                          7%
                                                                Meat products    Steel produts

                                                                Furniture        Pharmaceuticals
                                                                Plastics         Beverages
                                       3%   4%
                      3%   3%    3%                             Other


India-Montenegro bilateral trade from January to the month of December 2009 amounted to US$ 2.01
million of which US$ 2.01 million were exports from India and US$ 0 million imports into India.

Main items of exports from India from January to December 2009 were coffee, tea, spices, sugar, fruits &
vegetables (USD 602.4 thousand), road vehicles 7 parts (USD 283.5 thousand), apparel , fabrics, accessories,
home textiles (USD 262.0 thousand), plaster, cement, mica & building stone(USD 214.7 thousand), Iron &
steel products (USD 122.6 thousand). The top 5 product groups account for around 75% of total Indian
export. In 2009 there were no Indian Imports from Montenegro.

   Top 10 Indian Export Groups:
   Nr.      Products                                                        USD            % Exp.
            Total Exports from India                                     2,014,472.1         100%

   1           Coffee, tea, spices, sugar, fruits & vegetables             602,359.3        29.9%
   2           Road vehicles ,accessories and spare parts                  283,538.3        14.1%
   3           Apparel , fabrics, accessories, home textiles               262,081.6        13.0%
   4           Plaster, cement, mica & building stone                      214,690.0        10.7%
   5           Iron & steel                                                122,620.9         6.1%
   6           Furniture, bedding , mattresses & cushions                   67,248.0         3.3%
   7           Explosives, pyrotechnic prod. & matches                      57,670.9         2.9%
   8           Ceramic products                                             50,139.9         2.5%
   9           Rubber and articles thereof                                  47,202.5         2.3%
   10          Paper , books and other printing                             42,857.9         2.1%
   Top 10      Total                                                       1,750,409        86.9%
               Other                                                       264,064.6        13.1%
   Source: Statistical Office of the Republic of Montenegro, National Bank of Montenegro

    2.    Economic and Commercial Developments in Montenegro
2.1 Main Economic Overview

       In the year of global economic recession Montenegrin GDP growth in 2009 plummeted by around
5.3%. This was close to the regional average as Croatian GDP decreased 7%, Serbian GDP decreased
2.9% Bulgarian GDP decreased 4.8%, Hungarian GDP decreased 5.8%.

The inflation on annual basis was 1.5 % which was an improvement compared to 7.1 % in 2008.
Montenegro ended 2009 with a budget deficit of 3% and a foreign trade deficit of 27.7% of GDP.
Unemployment rate of 14% was registered which is around 1.1% less than in 2008
In 2009 Montenegro saw a drop in industrial production of 32.2 %. Manufacturing dropped 38.6%,
mining and quarrying decreased 65.5%, and the energy production decreased by 2.4%.

The Montenegrin economy in 2009 was pressured by lack of liquidity due to the considerable decrease in
economic activity in the manufacturing industry as well as the construction and tourism industry, which
resulted in a banking and credit crisis. This crisis was overcome by financial injections of the Montenegrin
Government. Due to the recapitalization of the Montenegrin National Electric Company , the
Government had enough available funds for maintaining the stability of the economic environment.
Although currently talks are ongoing with the IMF to ensure long tern stability.

The IMF mission together with the Montenegrin Government, is working on measures to reform tax
system, which had during ‘boom’ years mostly relied on value added tax as the main source of budget
revenues, but has been put under pressure during global recession . The strong demand for import of
goods and services had dramatically fallen during the economic crisis and it is unlikely that it will regain
the levels from the time of ‘economic boom’.

2.2     Inflation
               Annual Inflation at the end of in 2009 was 1.5% which is a substantial decrease compared
        to 7.1% at the end of 2008. Consumer prices recorded an insignificant monthly increase in
        December 2009 of 0.1%.

2.3    Industrial production

        Industrial output registered monthly increase in December 2009 of 26%. All three sectors
recorded monthly output increases in December, whereby the production in the mining and quarrying
sector rose by 21.7%, that in manufacturing industry by 19.7%, and the production of electricity, gas and
water supply increased by 34.7%.

Total year-on-year industrial output decrease in 2009 amounted to 32.2%, whereby all three industrial
sectors recorded production declines. The sharpest fall was recorded in the mining and quarrying sector,
of 65.5%, followed by a 38.6% decline in manufacturing industry, while the production of electricity, gas
and water supply decreased by 2.4%.

2.4    Average Net Wages

     The average net wage paid in December 2009 in the Republic of Montenegro totalled USD 601.9.
Compared to the average net wage paid in December 2008, this was an increase of 18.6% in real terms.

2.5   Montenegrin Foreign Trade

The overall external trade in the Republic of Montenegro for the period of January-December 2009
amounted to USD 2.62 billion, which was a 49% decrease compared to the same period 2008.

The value of exports amounted to USD 388.7 million, which was a 33.6 % decrease when compared to
the same period in 2008, while the value of imports amounted to USD 2,23 billion, which was a 42.2 %
decrease         relative         to          the       same        period          in         2008.

The trade deficit amounted to USD 1,84 billion, which was a decrease of 43.7% in relation to the
same period in 2008.

Montenegrin external trade in the reference period noted the highest level with countries in the region ,
trade with Serbia accounts for around 35% of total trade - Croatia , Bosnia, Italy , Slovenia and Greece all
individually account for around 8%-6% , and the top 6 countries together for around 70% of the total
foreign trade.

2.6 Foreign Direct Investments

       There was a substantial inflow of FDI in Montenegro in 2009, primarily due to the privatization
and recapitalization of EPCG (Montenegrin Electric Power Company) and recapitalization of banks.
According to preliminary data, net FDI inflow (inflow minus outflow) amounted to USD 1,229.79 million,
being 65.1% higher than in 2008. Total FDI inflow in 2009 amounted to USD 1,442.3 million, which is
30.8% more than in the previous year. The FDI inflow related to EPCG privatization and recapitalization
accounted for 41% of total FDIs, whereas FDIs in recapitalization of banks amounted to 10%.

2.7 Foreign Currency Reserves

        Total allocated reserve requirements of banks at the Central Bank of Montenegro amounted
to USD 233.28 million at end-December 2009. These allocations were USD 0.54 million (0.25%) higher
than in the previous month, yet USD 59.13 million (20.2%) lower than at end-2008. These trends are the
result of the amended reserve requirement policy and the movement of total deposits.

3.     Major Investments within and outside the country

Foreign Investments

USD 130 million more for the marina. Canadian company Adriatic Marinas will invest additional USD
130m in the construction of residential facilities and expand the marina in Porto Montenegro by 100 new
slots. This company has been present as an investor in Montenegro for four years. Money will be invested
in the construction of buildings, infrastructure, as well as in forming of a company for service and repair
of yachts in Bijela.

Lamborghini announced the opening of a factory of electric cars in Montenegro. Italian
Lamborghini luxury car company, announced that it would open an electric car factory in Montenegro.
Lamborghini confirmed that the company was interested in entering the business in cooperation with the
Montenegrin Government and another partner. Around 1,000 electric cars a year will be produced in the
future factory at the beginning, but the production could be expanded later. The factory will be built in a
relatively short period of time.

Montenegrin Investments / projects abroad

New Meat processing plant. Montenegrin company Mesopromet from the meat processing industry has
opened up a meat processing plant in Perin Han , Bosnia & Hercegovina. The Mesopromet company is
manufacturing top quality Montenegrin traditional sausages and smoked-meat products. Mesopromet has
the HACCP certificate for quality food production and is also exporting its products to the EU market.

Other news items of interest

Credit rating reduced. Standard & Poor’s (S&P) credit ratings agency announced that it reduced
Montenegrin rating for long-term indebting to BB from BB+, with a negative prognosis. The agency
confirmed the current rating for short-term indebting (B), with a negative prognosis. According to S&P,
Montenegro is still facing big macro-financial risks, growing pressures on state finances after the harsh fall
of the GDP in 2009, withdrawal of credits and difficulties in the domestic banking system.

Ready for the EU in 2014. Montenegro could become a full member of the EU in 2014, according to
Minister for European Integration Gordana Durovic , as Montenegro could open the negotiations on
membership in 2011. Montenegro and Macedonia are more prepared than other countries that are
potential candidates for membership. Durovic said that Montenegro has very good preconditions to
realize the planned deadline.

Ratification of the SAA Agreement soon. Belgium will soon ratify the Stabilisation and Association
Agreement between Montenegro and the European Union, which will raise the relations of the
Montenegrin state and the European community to the next level. After the ratification of the Agreement
in Belgium, this document will come into force as the parliaments of all other EU members have already
ratified it.

Foreign investments in Montenegro increased by 60 %. Until the end of November 2009, net direct
foreign investment in Montenegro increased by 59.6 % regarding the same period in 2008, and amounted
to USD 1,16 billion. A big amount of investments was realized through privatization and capital increase
of the Montenegrin Electric Enterprise (EPCG) and the capital increase of banks. Investments in
domestic companies and banks were also increased and amounted to USD 890 million at the end of
November 2009.

Investments in January USD 36.5 million. The inflow of direct foreign investments in Montenegro
amounted to USD 36.5 million in January 2010. This is an increase of 1.7 % in regards to January 2009.
Investments in real-estates amounted to a bit more than USD 12 million, which is one fifth less than in
the same period last year.

Italy tops the list of foreign investors in Montenegro. After the signed agreement on strategic
partnership of the Republic of Italy and Montenegro and a contract on installing a high voltage energy
cable from Peskara to Tivat, worth USD 970 million, Italy is now the first foreign investor in Montenegro.
The agreement on strategic cooperation, signed by the two countries on the construction of an
underwater energy cable is the crown of the friendly cooperation.

Deposits down 2%. Deposits of citizens in January amounted to USD 1.12 billion, which is around 2 %
less than in December 2008. Total assets of commercial banks in January amounted to USD 3.92 billion,
more than 3% less than in December 2008.

Aluminum Plant increasing production. The Aluminum Plant Podgorica (KAP) put 25 new cells into
operation, which enables bigger aluminum production. The workers organization reached an agreement
with the Montenegrin Government for the increase in production.

Chinese look to build motorway in Montenegro. Montenegrin Minister of Transport, Maritime Affairs
and Telecommunications Andrija Lompar said that Chinese partners are interested in designing and
constructing the section of the Adriatic-Ionian motorway that passes through Montenegro. Mr. Lompar
said that it is first necessary to sign an inter-state agreement. The high level Chinese delegation is expected
at the end of April 2010, and one of the subjects that will be discussed is the construction of the Adriatic-
Ionian motorway.

India’s investment interests/Future Auctions and Tenders
Privatization of Bar Port on hold. Director of the Bar Port stated that the tender failed for the sale of
the company. The tender for the purchase of the BAR Port ended on March 31 and there were no
bidders as the consortium of Serbian businessmen from MK grupa, Viktorija grupa and US Steel gave up.

For more information on tenders in please visit the following website of Montenegrin Investment
Promotion Agency : www.mipa.co.me/page.php?id=16

Upcoming Fairs and Exhibitions in Montenegro.

       Nautical Show 29th April- 3rd May 2010 (Nautical , sports, camping equipment & accessories)
       Art Expo 27th May- 2nd of June 2010 (Nautical equipment, sports equipment & accessories)
       32. Security, Protection and Rescue Fair 8-12th June 2010
       32nd Civil Engineering Fair      22-26th September 2010
       13. Automobile Show           6-10th October 2010

More information available at: www.adriafair.co.me

Useful business links for Montenegro:
  Government of Montenegro           www.gov.me/en/homepage?alphabet=lat
  Montenegrin Ministry of Economy    www.minekon.gov.me/en/ministry?alphabet=lat
  Montenegro Chamber of Economy      www.pkcg.org/index.php?lang=en
  Central Bank of Montenegro         www.cb-mn.org/eng/index.php
  The Adriatic Fair                   www.adriafair.co.me
  Montenegrin Investment Promotion Agency www.mipa.co.me
  Montenegro Tourism Board           www.montenegro.travel
  Montenegro Business Alliance       www.visit-mba.org
  Montenegrin Union of Employers      www.poslodavci.org/eng/Default_e.asp
  Port of Bar                         www.lukabar.me

        This issues with the approval of:
                                                                                            Saikat Sen Sharma
                                                                                            SS (Com) & HOC
Distribution: As per list suggested by ITP Division


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