The use of the name Crna Gora or Black Mountain (Montenegro) began in the 13th century in reference to a highland region in the Serbian province of Zeta. The later medieval state of Zeta maintained its existence until 1496 when Montenegro finally fell under Ottoman rule. Over subsequent centuries, Montenegro managed to maintain a level of autonomy within the Ottoman Empire. From the 16th to 19th centuries, Montenegro was a theocracy ruled by a series of bishop princes; in 1852, it transformed into a secular principality. Montenegro was recognized as an independent sovereign principality at the Congress of Berlin in 1878. After World War I, during which Montenegro fought on the side of the Allies, Montenegro was absorbed by the Kingdom of Serbs, Croats, and Slovenes, which became the Kingdom of Yugoslavia in 1929; at the conclusion of World War II, it became a constituent republic of the Socialist Federal Republic of Yugoslavia. When the latter dissolved in 1992, Montenegro federated with Serbia, creating the Federal Republic of Yugoslavia and, after 2003, shifting to a looser State Union of Serbia and Montenegro. In May 2006, Montenegro invoked its right under the Constitutional Charter of Serbia and Montenegro to hold a referendum on independence from the state union. The vote for severing ties with Serbia barely exceeded 55% - the threshold set by the EU - allowing Montenegro to formally restore its independence on 3 June 2006.
Southeastern Europe, between the Adriatic Sea and Serbia
Population - distribution
highest population density is concentrated in the south, southwest; the extreme eastern border is the least populated area
Serbian 42.9%, Montenegrin (official) 37%, Bosnian 5.3%, Albanian 5.3%, Serbo-Croat 2%, other 3.5%, unspecified 4% (2011 est.)
PODGORICA (capital) 165,000 (2014)
- Conventional long form
- Conventional short form
- Local long form
- Local short form
- Crna Gora
- Geographic coordinates
- 42 26 N, 19 16 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1 hr, begins last Sunday in March; ends last Sunday in October
has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction
Montenegro's economy is transitioning to a market system. As of 2015, around 90% of Montenegrin state-owned companies have been privatized, including 100% of banking, telecommunications, and oil distribution. Tourism, which accounts for roughly 20% of Montenegro’s GDP, brings in three times as many visitors as Montenegro’s total population every year. Several new luxury tourism complexes are in various stages of development along the coast, and a number are being offered in connection with nearby boating and yachting facilities. In addition to tourism, energy and agriculture are considered two distinct pillars of the economy. Only 20% of Montenegro’s hydropower potential is utilized. Montenegro plans to become a net energy exporter, and the construction of an underwater cable to Italy, which will be completed by 2018, will help meet its goal.
- External debt stocks
- US$ 2,665,359,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -784,194,332
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 2,740,370,575
- Exports of goods and services
- US$ 1,762,551,991
- Total Merchandise Trade
- FDI, net inflows
- US$ 226,666,592
- Commercial Service Exports
- US$ 1,395,978,593
tobacco, potatoes, citrus fruits, olives, grapes; sheep
steelmaking, aluminum, agricultural processing, consumer goods, tourism
- Croatia 22.7%, Serbia 22.7%, Slovenia 7.8% (2012 est.)
- Serbia 29.3%, Greece 8.7%, China 7.1% (2012 est.)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.
- Tourism potential (sea, mountains, climate)
- Hydroelectric potential
- Use of the euro
- Negotiations for membership in the European Union
- Small market
- Lack of diversification
- Inadequate infrastructure
- Scale of structural unemployment and shortage of qualified workers
- Size of the ethnic vote and political impasse
- Mediocre business climate
- Large black-market economy (39%)
- Organized crime
Growth is expected to pick up in 2017, driven by higher public investment. A large proportion of this relates to the construction of the highway linking the port of Bar to Boljare, at the border with Serbia. The construction of the electricity power line connecting the country to Italy will continue and is scheduled for completion at the end of 2017. The construction contracts signed in autumn 2016 show that progress is being made regarding the extension of the Pljevlja power station. Public consumption will decline, linked with the concentration of spending on investments.
Household consumption will slow, because of a continuing high level of unemployment (estimated above 17% in 2017) and falling purchasing power as inflation increases with the gradual recovery in oil prices. There will be continued investment in the tourist sector, such as the building of a luxury complex in the Bay of Kotor, scheduled for commissioning in summer 2017. Despite the increase in tourist infrastructures, tourism, which accounts for 10% of GDP, could suffer because of the reigning political instability and the deterioration in relations with Russia, home to around a quarter of summer visitors.
Aluminum and steel exports by Kombinat Aluminijuma Podgorica (KAP) and the Toscelik steel mill in Nikšić will be disrupted by the restructuring of the mining sector, to such an extent that the contribution from foreign trade to growth is likely to remain negative.
Public deficit and debt will remain high. Tax collection, based on VAT and social contributions, is mediocre, while control over current expenditures, in particular social spending and wages, is not a given, as suggested by the passing of a correcting finance law for 2016. Investment spending will remain high despite the use of private partnerships and concessions. In addition, fiscal exemptions aimed at attracting foreign investment into the tourist sector are expensive. Public debt and the public deficit will continue to grow mainly because of the cost (6% of GDP annually until 2019) of the construction of the Bar-Serb border road and the burgeoning issue of Eurobonds by the government. Finally, the dispute between the government and the Cypriot Central European Aluminum Company (CEAC), owned by a Russian oligarch, both shareholders of KAP when it went bankrupt in 2013, could develop further. Following the rejection in Paris (July 2016) of its compensation claim for being stripped from its assets because it is not really headquartered in Cyprus and, therefore cannot benefit from the Cypriot-Montenegrin treaty on investment protection, CEAC now wants to take the legal proceedings to Cyprus.
The current account deficit will increase further in 2017. Foreign trade will continue to run a deficit. The country’s exports, mainly metals and electricity, highly sensitive to the international economic context and weather conditions, will be easily offset by imports of capital goods and food products. In addition, the country’s energy bill will increase as oil prices (the main import) recovers. The balance of services could also suffer with any slowing down in tourist numbers. Foreign investments, 28% of which are Russian, in the tourist and energy sectors, the remittances of workers abroad as well as undeclared capital inflows invested in second homes finance the current account deficit.
The situation surrounding the parliamentary elections in October 2016 was tense. The elections were marked by rumours of threats to Prime Minister Djukanovic’s life and the arrest of Serbian people, claimed to be agents of a third-party foreign country. The Socialist Democratic Party (SDP), which emerged out of the former Communist Party and having dominated the political stage since 1991, won 36 seats out of 91, not enough for an absolute majority. The results are being challenged by the opposition, led by the pro-Serbian Democratic Front. A new government was nevertheless formed in November 2016, with the opposition boycotting the parliamentary vote. There will thus be a coalition between the SDP and the parties representing the ethnic minorities for the coming years. M. Djukanovic announced after the election that he would not be standing again as Prime Minister. Another leading figure in the party, Dusko Markovic, was appointed Prime Minister, although M. Djukanovic retains significant influence as the leader of the SDP.
Corporate life is complicated by corruption, the politicization of justice, organized crime, an inaccurate land register and slow administrative procedures. However, EU accession negotiations are leading to improvements in the business climate. In 2017, Montenegro was in 51st place out of 190 in World Bank’s Doing Business survey. The NATO membership process is continuing. This issue is, however, divisive within civil society to the extent that future membership of NATO would provoke the ire of Russia, which has a considerable financial and property presence in the country.