Montenegro's Growth Model Has Hit Its Limits, Chamber Chief Warns

The Limits of Montenegro's Consumption and Tourism-Led Model

Montenegro's economy expanded for two decades largely on the back of household spending, tourism and imported goods. But Nina Drakić, president of the Montenegrin Chamber of Commerce (PKCG), warned in an interview with Forbes Montenegro that this model has reached its practical limit and can no longer guarantee steady improvements in living standards or competitiveness.

Her assessment is drawn from a PKCG analysis covering 2006 to the present, which identifies five phases of growth. The first phase, from the restoration of independence until the global financial crisis, set the pattern: large inflows of foreign capital, heavy real estate and tourism investment, rising domestic consumption and high import dependence. A later investment cycle from 2016 brought the Bar-Boljare highway, a submarine electricity cable to Italy, luxury resorts and northern ski developments, diversifying the economy somewhat but not changing its core structure.

The analysis shows why the old formula is now strained. Employment has risen 79 percent, real GDP 65 percent, and real gross wages around 51 percent since 2006, but labour productivity is about 8 percent lower than it was two decades ago. Drakić argues that when labour costs rise faster than the value workers create, especially after 2021, businesses face eroding competitiveness rather than robust expansion.

She calls for the next development phase to be built on technology, digitalisation, vocational and dual education, and a shift of investment away from real estate toward sectors that can keep more value inside the country, including energy, food processing, ICT and logistics.

Why Drakić Says Wages, Tourism and Imports Can No Longer Carry the Economy

The productivity-wage gap behind the warning

The most concrete signal in the chamber's analysis is that employment and wages have grown much faster than output per worker. PKCG figures put real GDP up 65 percent and employment up 79 percent since 2006, while productivity is about 8 percent lower and real gross wages are around 51 percent higher. The result is that unit labour costs rise faster than the value produced, a gap Drakić says has widened since 2021. In her interpretation, a country can sustain that for a while through domestic demand and tourism, but it eventually prices its own labour out of export markets and limits real wage growth.

Why tourism and property investment are no longer enough

Drakić does not argue that tourism or consumption will disappear. Rather, her point is that growth from those sources tends to leak into imports rather than build domestic production. The chamber's analysis says industry, agriculture and construction together fell from about 24.2 percent to 15.7 percent of GDP, leaving the economy exposed to seasonality and external shocks. That exposure is the rationale for the 2031 focus on ICT, logistics, energy and light industry, not a prediction that tourism is about to collapse.

What €11 billion in food imports reveals about local supply chains

A striking figure in the PKCG presentation is that Montenegro spent about €11 billion on food imports over 20 years. Drakić uses that number to argue that the tourism and agriculture sectors are not properly connected: hotels and restaurants need large, reliable, certified volumes, while domestic production is fragmented and seasonal. She says the fix requires cooperatives, cold-chain storage, quality and origin labels, and contracted purchasing between hospitality and agricultural producers. The logical benefit is less import dependence and more tourist spending retained in Montenegro.

The institutional and fiscal bottlenecks

Drakić places two risks behind the lack of progress. First, she says public institutions are slow and unpredictable in applying rules, and they lose experienced civil servants to the private sector and abroad; investors care more about that predictability than about the number of laws adopted. Second, she argues that Montenegro did not consistently build fiscal reserves during strong-growth years, because higher revenues often brought new permanent spending obligations. For future policy, that means running down deficits and public debt in good years so the state can respond in downturns without extra borrowing.

Concrete Policy and Business Moves Drakić Outlines Through 2031

The interview points to a set of specific decisions for businesses active in Montenegro and for the government agencies that shape the 2031 agenda.

• Tourism, trade and construction companies should digitise core operations first: Drakić argues that small gains in these largest employers have the largest aggregate effect on productivity, and the current wage-growth gap makes efficiency the buffer against eroding margins.
• Food and agricultural producers should pursue cooperatives, cold-chain investment and origin certification to meet hotel demand; PKCG's €11 billion food import figure over 20 years shows the scale of missed domestic substitution.
• Businesses relying mainly on domestic demand or tourist numbers should build export or new regional customer relationships rather than plan the next two years on more of the same volume: unit labour costs are already rising faster than productivity, especially since 2021.
• Government and investors in energy, ICT and logistics need to focus on the named bottlenecks before 2031: faster energy permitting and grid development, rail and Port of Bar modernisation, and a larger ICT workforce.
• Fiscal planners should finance permanent spending from permanent revenue and direct high-growth-year surpluses into lower debt and reserves, rather than repeat the pattern of creating new permanent obligations during booms.