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PODGORICA (Montenegro), November 8 (SeeNews) - The European Commission said on Thursday it has raised its forecast for Montenegro's economic growth in 2018 to 3.9% from 3.0% predicted earlier, driven by construction and tourism.
Montenegro's economic growth forecast for 2019 has been lowered to 2.8% from 2.9% projected in May, the Commission said in its Autumn 2018 Economic Forecast report.
The composition of growth is expected to be altered by the completion of two important infrastructure projects which are set to lead to a significant deceleration of investment, the European Commission said. "At the same time, the resulting contraction of construction-related imports, along with capacity-increasing projects in the export sector, are expected to turn the contribution of net exports to growth positive, compensating for the projected slowdown in domestic demand."
The expected completion of two important infrastructures, namely the interconnection power cable with Italy and the first section of the Bar-Boljare highway between 2019 and 2020, are set to dampen investment, and therefore its contribution to gross domestic product (GDP) growth. At the same time, investment-related imports are forecast to decline as these large projects are completed. Moreover, new investments in the production of aluminium as well as in new renewable energy plants, are projected to reinforce export capacity
The implementation of the public administration reform may have some negative but temporary effects on unemployment. The expected downsizing in the public sector, estimated at some three thousand jobs until the end of 2020, is equivalent to 1.3% of total employed persons in the country, the Commission said.
Montenegro's main economic indicators outlook (pct change):
|Gross fixed capital formation||17.7||11.2||3.0|
|Unemployment rate (as % of total labour force)||15.5||14.9||14.6|