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MONTENEGRO
MINISTRY OF FINANCE
Sector for Economic Policy and Development
MONTHLY MACROECONOMIC INDICATORS
November 2011
Prepared by:
Iva Radovanović
Radojka Martinović
Radovan Živković
Stanko Jeknić, PhD
Vladislav Karadžić
Coordinator:
Tijana Stanković, MSc
KEY NOTES
Alarming situation in European political
and financial scene additionally
deteriorates liquidity of Montenegrin economy.
Tourism – the generator of growth in 2011
Remark:
Macroeconomic monthly outlook is a new publication of Ministry of Finance providing macroeconomic and fiscal indicators trends on monthly level. The initiative
resulted from the requirement of data and analysis users to have brief and overall outlook. Since it is a new type of publication it will be the subject to
improvement through its each edition by the end of 2011, thus providing the opportunity for potential changes.
Considering the fact that dynamic of MMI publishing from January 2012 is going to be by the end of the current month comprising the available data for the
previous one, November edition from 2011 includes available data and indicators including October 2011, while December will be including November.
1. International Environment
Graph 1 shows that measures to prevent spread of crisis in Euro
zone of G-20 Cannes Summit, held at the beginning of November,
did not get approval of financial markets -interest rates are
increasing, except the ones referring to Germany since the demand
is strong due to its status of ”safe port”.
Graph 1
10 Years bond yields
7.5
Summit G20
6.5
Summit
5.5
%
Deepening of the crisis in Euro zone resulted in resigning of Prime Ministers of Greece and
Italy. First one due to risky proposal to conduct referendum in Greece aimed at verifying
readiness of voters to accept the burden of long term painful reform as a precondition for
receiving the tranche from the second bailout package, while the second one resigned due to
loss of market confidence into readiness and capability to implement painful reform. The
cost of Italian debt fell down to the lowest level since establishment of Euro zone, so the
required rates exceeded critical limit of 7 %, which is deemed as unsustainable level. After
strong buying of Italian debt by European Central bank, Italian 10-year bond yields for a short
time returned to 6.5 % but then rose again and currently are 7.46 %. However, countries
from AAA zone (credit rating) are coming into focus gradually: France, Austria; Finland and
Netherlands. The gap between required debt yields between first two countries and German
exceeded 150 points (1.5%) and there are certain doubts into their jealously kept rating. The
reason of this increase is low estimated growth of French economy and high exposure of
Austria to Italian debt along with debt within region of East and South-East Europe. The crisis
overflows to countries of Eastern and South-east Europe. Thus the price of Slovenian debt is
in downfall since the borrowing rates exceeded 7 % and there are speculations that it could
be the next candidate applying for bailouts from eurozone. The reason is primary high
exposure of its real and banking sector to Italian. Hungarian credit rating was decreased to
„junk”. European Commission cut estimated growth rates for eurozone countries from 1.6
to 0.5 % which is certainly not encouraging signal. All this must result in negative
repercussion to Balkan region and our country due to high exposure of these economies to
turbulence in neighborhood in every economic sector: banking, real and sector referring to
public finance.
Aluminum price is currently 2002$/T, which is by KAP assumed as level not sufficient for
rentable operation. Oil price is 108.6$/barrel and within last three months it ranges around
110 $/barrel. Inflation in eurozone in October reached 3 % on annual level.
Italy
Spain
4.5
Belgium
3.5
Austria
France
2.5
Njemačka
1.5
1.6.11
1.7.11
1.8.11
4. Employment and Wages
In October 2011 the unemployment rate was 11, 4%, which presents decline in comparison
to October 2010 when it was 11, 7%. However, in comparison to previous month, slight
growth of unemployment rate for 0,29 p.p. has been recorded. According to LRS
methodology (Labor Force Survey) the unemployment rate in the second quarter of 2011
was 19,9% i.e. approximately at the same level as in the second quarter of 2010.
Unemployment in October 2011 declined for 5,4%, while employment, as per September
2011 data, grew for 4,3% on annual level. Number of newly employees for January-October
2011 period was 17.789, out of which seasonal employment was 8.356 or 27,5% of total
unemployed. Average gross wage in October 2011 was € 711 while average net wage was €
477 and remained the same in comparison to previous month. Average net wage in JanuaryOctober 2011 period recorded real decline for 1, 2% comparing to the same period of 2010.
1.11.11
Graph 2
Real sector
-Annual percent of change-
50
40
30
20
10
0
I
-10
II
III
IV
V
VI
VII VIII
IX
X
2011
-20
Manufacturing
Turist overnight
Retail turnover
3. Prices
Inflation measured by Consumer Price Index in October recorded the level of 3,3%
presenting the downfall in comparison to the beginning of 2011. Products and services
which on annual level impacted the inflation growth in October are: alcohol beverages and
tobacco (25,6%), health (17,7%), transportation (10,1%), while products and services with
higher participation in overall index had declining effect: food and beverage (1%), clothing
and footwear (-0,8%), household and household devices (-0,9%) communications (0,9%).
Monthly inflation in October was 0,2%. Producer Price Index, sharply grew in the beginning of
July due to increase of production prices of food processing and base metals price, and
afterwards recorded slight decline and retained the annual level of 2,8%. The highest annual
growth of prices was recorded in mining sector (24%), food and beverage production
(12,2%), and base metals production (4,8%). Harmonized CPI in October 2011 was 3,9%,
presenting the 0,4 p.p. growth in comparison to the previous month.
1.10.11
Source :Thompson Reuters-source MF
2. Real sector
Growth of tourism turnover was driving force of activities in other economic sectors. Over
ten months of 2011 the growth of overnight stays was 10,2 % and arrivals 8,8%, in
comparison to the same period last year, which resulted from increased number of overnight
stays (12,0%) and arrivals (10,4%) by foreign tourists. In the same period the industrial
production declined for 5,9%, as a consequence of energy production fall for 25,4%, while
processing industry and mining grew for 8,7 and 2,0%, respectively. Recovery of basic metals
production continues by growth for 18,8% over ten months in 2011. It makes 20,5% of total
industrial production, i.e. 39,7 % of processing industry. Retail turnover for the first ten
months is higher for 20,1% in comparison to the same period of previous year which is
primarily result of tourism turnover growth. Value of executed construction works in the
third quarter of 2011 is higher for 2,1% in comparison to the same quarter of 2010.
1.9.11
Graph 3
Inflation
6,0
5,0
4,0
3,0
2,0
1,0
0,0
CPI
I
II
III
IV
HICP
V
VI
2011
Graph 4
PPI
VII VIII
IX
X
Graph 5
5. Public Finance
Collection of revenues and budget expenditures has been balanced in October. Current
budget revenues for the first ten months of 2011 amounted 919,94 mill € or 28,39% of
estimated GDP for 2011. (3.273, 00 mill €). With reference to nine months plan, revenues are
lower for 2,47 %, while in comparison to the same period of previous year, they were on
slightly lower level (0,41%). Excises are expectedly higher than last year and what is
important to point out is continuous satisfactory VAT collection which is still slightly lower
than planned but in the same time 7,2% higher in comparison to ten months of previous
year. Budget expenditures for ten months are executed by 94,70 % of plan, while in
comparison to budget execution for ten months of 2010, they are higher for 4,95%.
Considering the expenditure categories, the highest absolute growth in comparison to
previous year, was recorded at social care transfers – about 28 mil € (growth of pension and
social care contributions), while the highest percentage growth was recorded at interest
rates – for ten months of current year, the interest rates have been almost doubled in
comparison to previous year (over 85%). Budget deficit after ten months of current year
amounted 64,09 mill € or 1,96 % of GDP. In October, deficit recorded growth for only 0,47
mill €, due to balanced revenue collection and execution of budget expenditures. Primary
deficit after ten months amounted 19,35 mill €, while debt repayment reached level of 148,
45 mill € or 4,53 % of GDP. State debt after ten months of current year amounted 1448 mil €
which is 44,24 % of GDP. Internal debt was 383,5 mill € (11,72 % of GDP), while foreign debt
amounted 1064, 5 mill € or 32,52 % of GDP.
1000.00
900.00
2010
800.00
700.00
600.00
500.00
2011
400.00
300.00
200.00
100.00
0.00
-100.00
Expenditures
Current
DEFICIT
revenues
Graph 6
6. Monetary Sector
In September 2011, trend of credit activity decline and households’ deposits growth
continues. Total bank loans in September 2011 amounted 1.957,3 mill € and on annual level
were lower for 6,1%, or 2,6% on monthly level. Participation of bad loans in total loans is
19,7% and is significantly decreased in comparison to previous month when it was 25,3%
due to replacement of bad assets to mother banks. Out of total loans, loans to economy
amounted 985,8 mill. €, and are 25,4%, lower than in the same month previous year, while
households loans amounted 843,9 mil. € and are lower for 2,5% on annual level. Total
deposits in September 2011 were 1.877,8 mill €, which in comparison to the same month of
previous year present growth of 5,3%. Households’ deposits are 1.034,9 mill € and economy
deposits declined for 16,1% amounting 499,2 mil. €. Increasing trend of economy and
households’ deposits, starting with May this year, is encouraging (see Graph 6). Weighted
average deposit effective interest rates (passive interest rate) in September 2011 was 3,11%
and lower for 0,41 p.p. in comparison to September 2010. Weighted average lending
effective interest rates (active interest rate) in October 2011 was 9,73% and recorded growth
in comparison to September 2011 for 0,12 p.p.
7. Foreign Trade Exchange
In January-October 2011 period there was significant growth of goods export for 47,4% and
import for 11%. Export growth was determined primarily by aluminum export which value
in this period increased for 55% and amounted 156 mil € participating with 43% in overall
export. This period recorded significant increase of electricity export as a result of registered
re-export over the territory of Montenegro. Export of mineral deposits and waste increased
for 94 % in comparison to period January-October 2010 and was 32 mill € (partially refers to
re-export). Furthermore, within this period steel export increased for 48% and within period
January-October 2011 it was 23,7 mil €. In same period there was increase of import for 11%.
This increase resulted from significant growth of oil and oil derivates import. This import was
173,3 mill. € and was 30% higher in comparison to the same period last year. It is important
to point out that smaller quantities of derivates were imported but the price in the same
time was remarkably higher. Significant increase was recorded in import of electricity (280%
or 87 mill. €). This increase resulted from growth of electricity import for the purpose of
internal market, as well as import for re-export. It is important to point out that electricity
import in this year will grow significantly due to extremely long arid period and consequently
very low accumulations. Import growth is noticeable for mineral ores and waste, but it is
related to re-export over the territory of Montenegro. Import growth referring to food is 9 %
in comparison to last year’s period and amounts 291 mill. € or 19 % of total import.
Graph 7
Balance import &export of goods
300.0
45.0
43.0
200.0
Import
41.0
100.0
0.0
balance
IX
-100.0
-200.0
39.0
export
X
37.0
XI
XII
I
II
III
e
IV
V
2011
VI
VII
VIII
IX
35.0
33.0
31.0
29.0
-300.0
-400.0
27.0
25.0
Table 1: MACROECONOMIC INDICATORS– October 2011.
BDP
2010
2011
GDP in mill €1
3.104
3.273
GDP real growth in %
2,5
2,5
GDP nominal growth in %
4,1
5,5
X
XI
XII
I
II
III
IV
V
VI
VII
VIII
IX
October 2011
Jan-Oct
M-n-M
2011/ JanOct 2010
X
Indicators2
REAL SECTOR
Industrial production
37,1
48,4
45,7
2
8,4
-10,3
-20,4
-24,4
-18,7
0,2
18
-2
-4,2
3,2
Processing industry
21,6
42,6
21,3
24,7
28,1
10,5
-6,8
9,2
3,3
9,7
28
-3,7
0,8
-0,9
8,7
-13,5
4,8
-6,4
-1,9
-13,5
-1,3
21,3
-1,7
11,2
7,5
12,2
15,3
11,6
-87,9
10,2
35,4
21,3
-46,8
29,7
100
63,2
-1,9
0,5
-31,8
-22,7
-28,3
-14,7
47,4
5,0
3,1
2,1
6,4
-7,4
15,8
3,4
37,7
16,6
15,7
17,3
27,5
17,9
23,4
23,1
-12,9
20,1
NA
NA
NA
Nights spent in tourism
Production in wood industry
Retail turnover
Value of works in construction
60,7
18,1
35,6
2,1
-5,9
INFLATION
CPI
HICP
PPI
0,6
-
0,8
-
0,7
-
1,1
1,9
2,0
2,7
3,7
3,7
3,7
3,5
3,6
3,7
3,5
3,9
3,0
3,0
3,6
3,6
3,4
3,8
3,3
3,9
-2,9
2,6
3,1
NA
0,7
0,3
0,4
2,8
4,5
5,6
4,7
1,9
2,2
3,6
3,2
3,2
2,8
-12,5
3,4
157.918
157.712
157.679
157.849
158.010
158.842
159.669
162.905
168.195
170.618
167.955
165.386
NA
-1,5
0,1
31.900
32.199
32.106
32.829
33.062
32.748
32.203
30.994
29.816
29.128
29.078
29.405
30.180
2,6
-2,9
11,9
12,0
12,1
12,4
12,5
12,5
12,2
11,7
11,30
11,00
10,88
11,1
11,4
2,7
-3,1
711
716
19,7
768
772
754
21,2
722
705
714
19,9
708
710
709
712
711
-0,1
1,8
477
480
515
518
506
484
473
479
475
476
475
477
477
0,0
1,8
2076,00
2087,12
2058,31
2148,74
2151,44
2092,09
2092,05
2098,70
2045,40
2034,86
2008,54
1957,30
NA
-1,3
-10,9
558,28
-15,6
590,84
-17,6
522,47
-11,1
620,19
-11,3
608,99
618,02
578,08
696,19
567,46
605,56
591,57
NA
-2,3
-8,2
-11,0
-15,1
-14,8
-14,4
-19,9
-19,2
-19,7
-21,9
2,6
-16,3
-8,6
-7,8
-6,1
-8,0
-7,5
-6,9
-6,8
-5,0
-3,3
-2,4
-2,4
-2,5
-4,4
-16,2
-16,8
-7,4
-4,9
-8,6
-6,8
-24,4
-22,0
-18,4
-19,1
-16,1
13,0
12,3
13,7
12,7
13,1
11,9
12,8
13,4
EMPLOYMENT AND WAGES
Employment (number)
Unemployment (number)3
Unemployment rate (%)
Unemployment rate (MOR) (%)3
Average monthly gross wage in €
Average monthly net wage in €
MONETARY SECTOR 4
Total loans (in mill €)
Non-performing loans (in mill €)
Loans to economyi1
Loans to households1
Economy deposits
1
Individual savings1
13,6
15,1
12,8
14,0
Interest rates on loans2
9,6
9,6
9,6
9,6
Interest rates on deposits2
3,5
3,4
3,3
3,2
9,6
9,7
9,7
9,7
9,7
9,7
9,7
NA
9,6
NA
NA
NA
NA
9,7
0,3
-5,0
3,8
-14,6
7,8
1,2
12,9
-2,2
-17,7
1,7
NA
3,2
3,2
3,0
3,1
3,1
3,2
3,1
3,1
EXTERNAL SECTOR
Export
8,4
58,0
23,3
176,2
70,3
78,2
37,5
-7,0
35,3
14,7
41,0
54,3
67,4
13,7
44,7
Import
-9,2
4,1
-4,7
15,3
9,9
15,3
6,6
15,5
9,4
1,7
10,4
21,3
8,7
-12,8
11,2
-12,9
-9,2
-9,8
-20,8
-2,8
1,3
-0,6
23,4
5,1
-1,0
3,2
13,5
-6,7
-21,4
3,5
34.799.784
33.261.100
71.501.650
56.447.711
19.760.965
38.002.185
30.779.365
24.964.629
8.845.435
44.210.475
18.799.693
24.087.325
28,1
-38,5
30,9
Foreign trade exchange balance
Foreign direct investment (€)
NA
INTERNATIONAL ENVIRONMENT
Brent crude oil
Aluminum
Euribor (12 months)
Inflation in Eurozone
83,2
85,9
93,9
101,0
111,8
117,4
125,9
116,7
112,5
116,7
114,9
102,8
109,6
-10,5
2.342,2
2.324,1
2.356,7
2.439,7
2.515,3
2.555,5
2.667,4
2.587,2
2.557,8
2.525,4
2.381,0
2.293,5
2.180,7
-3,7
4,1
1,464
1,540
1,528
1,504
1,660
1,773
2,013
2,139
2,137
2,172
2,177
2,089
2,089
-4,0
40,2
1,9
1,9
2,2
2,3
2,4
2,7
2,8
2,7
2,7
2,5
2,5
3,0
3,0
20,0
64,2
Source: Monstat, Central bank of Montenegro, Employment Bureau, Ministry of Finance
M-n-M stand for monthly change (indicators’ change rate of subject month in comparison to previous month in %); NA – not available
1
Data for 2011 are estimation of Ministry of Finance
All indicators are presented as annual growth rates (indicators’ change rate of subject month in comparison to the same month of previous year in %) unless specified differently in title
From April 2011 the source of data regarding number of employees has been changed (Central Register of Tax Administration Office (CRPO), instead of Pension Fund and Health Fund;
4 Monthly change rates period-to-period for financial sector and investment refer to September, i.e. January - September.
2
3
Table 2: BUDGET OF MONTENEGRO–October 2011
Source: Ministry of Finance, Montenegro
2010
BUDGET OF MONTENEGRO
(in mill €)
ORIGINAL REVENUES:
Participation in
total exercised
revenue/
expenditure/debt
I-IX ‘11
(in %)
100
IX
X
XI
2011
XII
Jan-Oct
October
Jan-Oct5
Jan-Oct ’11/
Jan-Oct ‘11 plan
%
Jan-Oct ’11/
Jan-Oct ‘10
%
Oct ‘11/
Oct ‘10
%
100,41
99.00
91,67
123,21
923.74
90.13
919.94
97.53
99.59
37.22
33,88
44.55
33,67
57,61
365.24
34.66
342.38
101.37
93.74
77.82
3.55
0,95
0.75
1,22
1,02
18.03
1.61
32.68
106.43
181.31
215.31
Value added tax
35.59
32,93
26.27
31,35
27,45
305.38
30.71
327.45
98.18
107.23
116.93
Excises
12.99
15,83
15.10
10,36
13,64
110.26
12.29
119.48
95.98
108.36
81.37
Wages tax
Corporate tax
91.04
International trade and transaction tax
4.12
5,23
4.08
3,81
4,15
42.84
3.49
37.90
85.48
88.47
85.61
BUDGET EXPENDITURES:
100
100.97
111.65
109,28
175,88
937.65
90.61
984.03
94.70
104.95
81.16
29.40
20.51
30.33
22,76
42,07
218.83
22.03
284.76
90.70
130.13
72.63
Material and service
7.71
10.53
10.41
12,38
23,80
76.50
10.74
79.63
98.50
104.09
103.17
Interest rates
4.94
2.65
0.48
1,51
4,61
24.13
0.60
44.74
146.34
185.39
125.52
103.50
Gross wages and contrib. payable by employer
Social care transfers
37.64
37.02
37.30
36,21
39,80
347.13
38.61
374.92
102.69
108.00
Institutions, individuals and NGO transfers
6.64
15.39
15.12
16,39
24,40
133.85
6.05
65.41
87.92
48.87
40.01
Capital budget
4.52
6.26
5.89
7,54
23,64
51.44
6.78
47.25
69.82
91.85
115.19
Budget Surplus / Deficit
-0,55
-12.65
-17,61
-52,67
-13.90
-0.47
-64.09
-
-
-
Primary deficit
-
2,10
-12.17
-16,09
-48,06
10.23
0.13
-19.35
-
-
-
Debt repayment
-
11,77
29.10
4,12
30,77
180.92
11.77
148.45
-
-
-
State debt (debt status)
100
1279,20
1270,70
1279.2
1448.0
1448.0
-
113.20
-
Internal debt
26.87
361,50
358,30
361.5
383.5
383.5
-
106.09
-
Foreign debt
73.13
917,70
912,40
917.7
1064.5
1064.5
-
116.00
-
5
The table compares state debt at the end of tenth month of 2011 with status at the end of ninth month of 2010. In fact, MMI was not being prepared during the previous year and analyses of state debt were done only quarterly, thus there are no comparative data for ten
months.