Montenegro's Tourism Growth Slows Due to Rising Prices Deterring Visitors
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 29 2025
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Source: Benzinga
Economic Impact of Tourism in Montenegro
- Summer Tourism Significance: The summer tourism season is crucial for Montenegro, providing the majority of personal income for the year. However, rising prices have led to a decrease in visitor numbers.
- Visitor Statistics: Budva, a coastal town with a population of 18,000, sees its population double during summer. Recent data indicates a nearly 3% drop in overnight stays in July 2024 compared to the previous year.
Challenges in Economic Growth
- GDP and Economic Structure: Montenegro has a GDP of $8.1 billion and a population of 623,000. The economy is heavily reliant on tourism, which contributes about 24.5% to GDP and employs over 20% of the workforce.
- Growth Rate Decline: Economic growth slowed to 2.5% year-over-year in Q2 2025, the weakest since the COVID-19 pandemic, with inflation and high unemployment contributing to economic challenges.
Foreign Investment and Productivity Issues
- Investment Efforts: The Montenegrin government has promoted foreign direct investment to boost sectors like construction and tourism, but these efforts have not resulted in significant productivity gains.
- Infrastructure Challenges: Major projects, such as the Bar-Boljare Highway, have faced corruption allegations and financial mismanagement, hindering economic progress.
Corruption and Governance
- Corruption Perceptions: Montenegro ranks 65th out of 180 countries in Transparency International's Corruption Perceptions Index, highlighting ongoing issues with systemic corruption and governance.
- EU Support: The EU remains a key donor, recently approving a €22.5 million grant for water and wastewater projects aimed at improving living standards for 30,000 people.
Regional Disparities and Development Imbalances
- Economic Disparities: The northern region of Montenegro, rich in natural resources, remains the poorest, with over 60% of the population living in poverty. Underinvestment and inadequate infrastructure hinder its economic contribution.
- Environmental Concerns: Urban sprawl and illegal construction are straining resources, while Montenegro is one of Europe's least efficient users of energy and water.
Policy and Employment Challenges
- Policy Framework: Montenegro has made progress in aligning its policies with EU standards, particularly in tourism and trade, but faces challenges from inefficient state-owned enterprises and slow digital infrastructure development.
- Unemployment Rates: Unemployment was around 11% in 2024, with young people particularly affected, leading to a brain drain as skilled workers emigrate.
Future Directions for Economic Resilience
- Need for Reforms: To align with EU standards and improve resilience, Montenegro must diversify its economy, enhance efficiency, and address corruption.
- Investment in Key Areas: The government is encouraged to invest in education, digitalization, and renewable energy to foster sustainable growth and improve living standards.
About the author

Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.





