Look for:

Products

Research Detail

2021/12/06 / Erste Group Research

Tourism rebound lifts growth


Following four straight quarters of economic decline, growth finally returned in 2Q21 (19% y/y), thus shaping average growth of 6.2% y/y in 1H21. Return of private consumption and more than doubled service export in 2Q21 were key factors in the respective period.

Tourism results should amount to around 70%-75% of pre-pandemic levels, thus some 15%-20% above our estimates earlier in the year. The economic recovery is thus driven by a surge in private consumption and exports of services. Contribution of public sector to growth is easing as the economic support measures phase out. Investment activity growth also appears weak as works on the first part of the highway project finally come to an end. Mentioned tourism outperformance lifts our FY21 GDP forecast to 13.1% y/y while our calls for 2022 and 2023 stand at 5.8% y/y and 3.5% y/y respectively.

The observed rise in global energy and commodity prices kicked in 2H21, pushing inflation to higher levels. Prices should peak early next year and then gradually decline. That said, given the proposed two-digit reduction of the tax wedge and consequently a rise in household disposable income, price pressures in Montenegro could be of more persistent nature. Bottom line, after the expected average rise of prices by 2.4% y/y this year, we see acceleration of prices by an average 2.9% y/y in 2022

Tourism-related windfalls eased fiscal concerns. The deficit of the central budget after 9M21 stands at just 1.3% of the forecasted GDP (compared to roughly 8% of the GDP in the same period in 2020). The MoF plans the FY21 budget gap at 3% of the GDP but given encouraging revenue intake since the introduction of e-fiscalization from mid-year we expect the gap will be 0.5pp lower at 2.5%. Next year’s gap is targeted at 3.9% of the GDP but could be lower given very ambitious CAPEX plan.

PDF Download Download PDF (471kB)

General information

AuthorErste Group Research
Date2021/12/06
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focus-
Currency in focus-
Sector in focus-
Download



Decline
Accept

We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.

INFORMATION FOR CORPORATE AND INSTITUTIONAL CLIENTS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended), citizen/resident of Australia, Canada, Great Britain and Japan. For this reason, the distribution or redistribution of the information, materials and products into United States, Australia, Canada, Great Britain and Japan or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited.

The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.
(iV) It is no consumer.