According to the most recent South East Europe Regular Economic Report published by the World Bank, the devastating flood effects in Serbia and Bosnia and Herzegovina combined with other factors, influenced the economies of the whole Western Balkans region resulting in stagnation. Although, there have been other contributors to this economic outcome, the 2015 outlook seems to be more optimistic. It is expected the region will grow by 1.3%, mainly driven by the external demand and the international energy prices.

As for Montenegro, there has been a moderate economic growth rate (1.5%), due to the spill-over effect from the state in the region, but also caused by the delay of big infrastructure projects in 2014. The Foreign Direct Investment (FDI) have been a significant contributor to this growth rate, but its structure should be changed in favor of the industry sector. At this point, most FDIs are related to the real estate and financial sector, but they should be more diverse in the future. However, in terms of attracting more sustainable FDIs, a strong effort must be made in improving the business environment. AmCham Montenegro’s latest Business Climate Report for 2014 will present an overview of the business environment in Montenegro from the investors’ point of view. Having in mind what growth potential lies in FDI and the dependence of the Montenegrin economy to this growth contributor, it is very clear that both the right economic policy and its implementation must be a priority for the Government of Montenegro in order to stimulate economic growth.

What are perceived as key limitations to the economic development by the World Bank Report can be summarized into:

All these factors have both upside and downside risks to the economic development in Montenegro, but from AmCham’s point of view, one of the key initiators of growth which should be closely monitored is investment climate and the overall business environment.