This year's growth will be mainly underpinned by rising net exports and a new wave of tourism, energy and infrastructure investments, the report read. The estimate is below the Montenegrin government's forecast for 3.6% GDP expansion but is slightly higher than the latest
The growth forecast for 2013 was also lifted to 2.7% from a previous estimate of 1.9%. Rising net exports, good tourism and post tourism seasons were the main drivers of the GDP expansion in 2013, the EC said. Economic growth is seen strengthening to 3.0% in 2015.
The EC noted that uncertainties related to the credit growth as well as the peace of the planned investments and their contribution to GDP growth in the short run will weigh on its growth outlook.
CPI inflation will remain subdued at 2.3% in 2014. It will accelerate slightly to 2.6% in 2015 as domestic demand recovery strengthens.
The country's budget deficit exceed the full year target of 2.7% of GDP and reached around 4% of GDP due to higher than planned expenditures related to bankrupt aluminum smelter KAP. Nonetheless,
The public debt will increase to 57.9% of GDP by end-2014 from 56.8% of GDP a year earlier, due to rising public investments. It will remain high at around 59% of GDP in the near term. The EC also warned that the rapid pace of growth of public indebtedness remains an important downside risk for its current forecast.
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