The direction of diversification of the economic structure should be focused on the application of information technologies and smart specialization
The global crisis, caused by the COVID-19 pandemic, has created market disruptions and a slowdown of the global economy. Countries around the world have been affected by the crisis, and especially service-oriented economies, such as Montenegro’s. In the period behind us, the Chamber of Commerce of Montenegro has actively contributed to the preservation of the economic substance and the elimination of the challenges faced by the business community due to the COVID-19 pandemic. We talked about the economic situation in Montenegro and the Chamber’s activities with its President, Vlastimir Golubović.
What is your assessment of the current economic situation in Montenegro, considering the consequences caused by the coronavirus pandemic?
In the years before the pandemic, Montenegro was on the road to dynamic economic and overall development. The closure of borders to combat the spread of the coronavirus, and the suspension and restriction of work, have directly and indirectly affected all sectors of the economy and caused a significant decline in economic activity, especially in tourism and transport. This is seen in the fact that, in 2020, the Montenegrin GDP declined by 15.2%.
In the previous year, the pandemic caused a 5.6% drop in Montenegrin household consumption, the largest drop since the global financial crisis in 2009. Increased economic uncertainty has also slowed down or delayed investment activity. Foreign direct investments in 2020 dropped by 14.8%, while net investments grew by 53.2% due to a smaller outflow of funds from Montenegro.
Negative trends were recorded in tourism – a decrease in the number of tourists (-83.2%), i.e. overnight stays (-82.1%), followed by construction (-5.6%), retail trade (-16.8%), and in all modes of transport. These trends caused the decline in revenue, which was the largest in tourism, as much as 86.8%.
The crisis caused by the coronavirus pandemic highlighted the pronounced vulnerability of the Montenegrin economy, due to its strong dependence on the service sector. The key measures are aimed at diversifying the economic structure. The direction of diversification of the economic structure should be focused on the application of information technologies and smart specialization. The pandemic has also demonstrated the importance of intensifying the valorisation of resources and potentials in the energy, agriculture, forestry and fisheries sectors, which would lead to higher employment and reduce import dependence.
In the previous year, the pandemic caused a 5.6% drop in Montenegrin household consumption, the largest drop since the global financial crisis in 2009
The previous year was challenging for everyone. How did the Chamber support its members during the pandemic?
Since the onset of the coronavirus in our country, the Chamber has continuously monitored economic activities and the challenges that businesses faced. Thus, it conducted several studies assessing the impact of COVID-19 on the Montenegrin economy, to ascertain the consequences of the crisis on the business sector and offer the Government concrete recommendations for effectively overcoming the negative impact of the pandemic.
The Chamber has played an active role in devising creating measures to support the economy. Also, as a member of the Western Balkans Chamber Investment Forum, we participated in the establishment of a green corridor system that allowed the uninterrupted 24-four-hour flow of goods at certain border crossings, giving priority to basic groceries, equipment and protective equipment. In cooperation with the regional chambers, we have prepared a proposal of measures for drivers of vehicles (temporary quarantine and self-isolation), monitored and informed about the situation at border crossings and cooperated with the relevant inspections present at the crossings. The Chamber Investment Forum had sent a request to the President of the European Commission to approve the export of protective equipment to the regional countries which the Commission approved in a very short time.
Which economic sectors are the driving forces behind Montenegro’s development?
Except for the processing industry, which experienced difficulties in procuring raw materials and exporting finished products, the pandemic had the least impact on the industrial sector. The coronavirus pandemic has shown the importance of domestic agricultural production and reducing import dependence. The realized value of purchase and sale of agricultural, forestry and fishery products in 2020 went up by 0.6% compared to 2019. The dairy sector, which implemented the relevant intervention measures to preserve its market, managed to record a 3.4 % increase in milk buy-up and 2.5% in cheese production.
The experience we gained during the coronavirus-induced crisis has highlighted the importance of digitization, as industries with a higher degree of use of information technology had fewer difficulties in performing their activities during epidemiological measures. The information and communication technology sector is one of the few that has suffered minimal losses during the pandemic and is even growing on a global scale. The increased need for services of ICT companies during the crisis showed that we should invest additional effort into developing the ICT sector. Also, we need to improve the quality of domestic supply through continued activities on promoting and validating domestic production and better positioning domestic products. Furthermore, efficient use and management of forests, as well as the processing industry, are an important potential in the development of the Montenegrin economy.
The path of development of the new model of the Montenegrin economy should be based on encouraging innovation, digitization and sustainable agriculture.
In 2020, the Montenegrin GDP declined by 15.2%
You were recently appointed a member of the board of the Vienna Economic Forum. What does this mean for you and what for the Chamber of Commerce of Montenegro?
At the regular session of the General Assembly of the Vienna Economic Forum, which took place on 8th March 2021, I was appointed a member of the Forum’s Board, an organization that has a long tradition. Its mission is to promote economic and overall cooperation relating to common economic and development interests of 13 member states, including Montenegro. Therefore, my appointment to the Board of the Vienna Economic Forum is a significant recognition for the Chamber of Commerce of Montenegro and validation of the Chamber’s reputation in international institutions dealing with issues of global economic cooperation.
What is the cooperation between your Chamber and the Chamber of Commerce and Industry of Serbia (CCIS) like?
Our Chamber and CCIS have exceptional bilateral cooperation, which is further intensified by cooperation through the Western Balkans Chamber Investment Forum (WB6 CIF). WB6 CIF is a joint initiative of chambers of commerce from Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia, which established a cooperation platform in 2017.
WB6 CIF represents 350,000 companies and the business community in the light of the political processes in the region, which are taking place under the auspices of the Berlin Process as an additional incentive for the Western Balkans in the EU accession process.
Building a common market is the most important job for our economies and the future of the Western Balkans so that companies can start enjoying the tangible benefits of regional integration as soon as possible. The Action Plan for the Common Regional Market for the period 2021-2024, adopted last autumn at the summit in Sofia, also under the auspices of the Berlin Process, is a continuation of activities on improving economic cooperation in the Western Balkan region on the road towards the full-fledged EU membership.
The Chamber of Commerce of Montenegro and Chamber of Commerce and Industry of Serbia have exceptional bilateral cooperation
What are the plans and goals of the Chamber of Commerce of Montenegro?
The Chamber’s activities, in the coming period, will be focused on stronger economic development and improving the business environment. One of the main priorities will be to support the revival of economic activities, especially after the pandemic subsides.
In order to relieve the economy and improve the overall business environment, the Chamber’s bodies and services will continuously monitor and analyze regulations as they impact business operations, and will continue to be the main initiator of amendments to existing laws and bylaws with the view of removing restrictions to doing business which ultimately contributes to boosting the competitiveness of the domestic economy.
The Chamber will continue promoting economic potentials and attracting foreign investments, as well as work on education and internationalization of our economy, conduct analyses and research, help municipalities with obtaining a favourable business environment certificate, and be a partner in reforming the education system. We will continue the implementation of numerous projects and develop international cooperation. We will especially focus on promoting domestic products through the projects ‘The Best from Montenegro’, ‘Buy local’, and ‘Homemade Tastes’.
We must constantly communicate with decision-makers to find quality solutions that will facilitate business operations and foster recovery and further development.