Montenegro Faces Growing Trade Deficit Amid Economic Challenges

Montenegro is grappling with a significant trade deficit as the economy enters autumn, with data from Monstat revealing alarming figures. From January to August 2025, the country’s trade deficit soared, with exports totaling only €365.7 million compared to imports exceeding €2.88 billion. This represents a 4.6% decline in exports year-on-year, while imports increased by 6.5%. The coverage of imports by exports has plummeted to just 12.7%, a stark decrease from 14.2% last year.

According to Mirza Krnić from the movement Preokret, these statistics reflect more than mere numbers; they signify the consequences of “poor planning and economic experiments” by the government. He warns that the current inflation rate of 4.6% in August further erodes the standard of living for citizens. Instead of focusing on enhancing production and competitiveness, Krnić asserts that the government burdens the economy and its people with new debts and extravagant spending to support an oversized administration.

Economic Missteps and Rising Costs

Krnić emphasizes that the government’s failure to address the economy’s challenges has led to these expected outcomes. Besides the negative trade balance, he highlights the troubling inflation, which exacerbates the situation. The government benefits from high prices as they collect more taxes, yet this short-sightedness undermines economic development. “Ultimately, it is the consumer who pays the price,” Krnić stated in an interview with Pobjeda.

He argues that the government is primarily accountable for the soaring costs, noting that both imported and domestic inflation contribute to a hidden form of taxation exacerbated by the “Europe Now 1” program. The situation worsens with the introduction of “Europe Now 2,” which he claims deepens the existing problems.

Krnić criticizes the government’s approach to financing, contending that they focus on borrowing to support a bloated administration and pay inflated salaries, rather than investing in developmental projects. He asserts that the issuance of bonds to citizens is misguided, as it prioritizes inefficient administration over necessary economic growth.

Dependency on Imports and Lack of Vision

Montenegro’s reliance on imports is a pressing issue, with Krnić noting that no substantial efforts have been made to change this dependency. The coverage of imports by exports has sharply decreased from 19.8% to 15.1% over two years, a trend expected to worsen. He attributes this decline to the temporary closure of the Thermal Power Plant, the influence of import lobbies, and a lack of vision for revitalizing production and enhancing productivity.

As costs rise more rapidly than wages, Krnić warns that increasing salaries without corresponding productivity gains is unsustainable. He anticipates a larger deficit for the year and asserts that the government’s current policies will not lead to improvements but rather exacerbate the situation. He describes the nation’s exports as primarily consisting of electricity and raw materials, with limited diversification.

Krnić believes the government should employ tax and excise policies to control prices and strengthen oversight of large retail chains to protect domestic products from import lobbies. He argues that the Competition Protection Agency must fulfill its role in preventing collusion among large corporations, as a lack of genuine competition undermines the principles of a liberal economy.

He advocates for the establishment of commodity reserves and mandatory purchase agreements to promote domestic production. He urges the government to prioritize the branding and marketing of local products to enhance their marketability.

In his view, fostering economic patriotism through various subsidies and discounts could initiate a shift towards the common good. “This government lacks the interest, desire, and ideas to implement these changes,” Krnić stated.

He concludes that increasing domestic production could reduce imports, boost exports, and enhance the consumption of local goods, leading to positive effects on employment, productivity, and competitiveness, ultimately lowering prices. By creating a more robust domestic economy, Montenegro could see improved tax collection based on sustainable production.

According to Monstat, the structure of exports, categorized by the Standard International Trade Classification (SITC), shows that mineral fuels and lubricants dominate, amounting to €96.9 million, which includes electricity valued at €73.1 million. On the other hand, imports are primarily machinery and transport equipment, totaling €699.2 million, with road vehicles accounting for €275.5 million.

Serbia, Bosnia and Herzegovina, and Slovenia emerged as Montenegro’s largest trading partners in exports, contributing €97.7 million, €31.8 million, and €27.5 million respectively. In terms of imports, Serbia led with €502.2 million, followed by China with €350.7 million, and Germany at €287.6 million. The highest volume of trade occurred with CEFTA members and the European Union.