Relying more heavily on our own resources and production capacities, and their upgrading and more efficient utilization, is the way to faster economic development
In this interview, Nina Drakić, president of the Chamber of Commerce of Montenegro (CCM), talks about the current economic situation in Montenegro, accelerated economic development and trend projections, as well as the relations between the CCM and the Chamber of Commerce and Industry of Serbia (CCIS) and the change in the structure of the Montenegrin economy.
The Chamber of Commerce of Montenegro celebrated 94 years of successful operations. What is the current economic and social situation in Montenegro like?
Celebrating our 94th anniversary reminded us of the Chamber’s rich tradition. It was an opportunity to highlight the partnership with everyone with whom we have been building a better future for our economy. The government and institutions are our natural partners, as are civil society institutions and the media. The last two years were marked by a health crisis, which also caused an economic crisis. During that period, we were a reliable partner to all interested parties to mitigate the negative effects on our economy. In addition to measures to support the economy and citizens, we have devoted our know-how to starting an investment cycle, proposing timely and effective economic policy measures and working on strategic issues of importance for economic progress. It is clear that the upcoming period will demand from us stronger and more solidary responses than those we would give under regular circumstances.
It has been said that Montenegro must follow the path of accelerated economic development. In which way does the Chamber of Commerce try to help and sublimate the demands of the Montenegrin business community?
Relying more heavily on our own resources and production capacities, and their upgrading and more efficient utilization is the way to faster economic development. Economic branches like agriculture, energy, tourism and green business, i.e. the circular economy, all have great potential. We contribute to that plan by implementing numerous activities. The Chamber participates in the preparation of draft laws and other regulations, proposes to the Government the adoption of programmes and measures to support the economy, prepares analysis of macroeconomic trends and gives recommendations for improving the business environment. Our goal is to respond to the economy’s needs and point out to the authorities the challenges it faces, while, at the same time, proposing solutions.
It is also a pleasure that I am the first woman at the head of an institution that, for almost a century, has been bringing together the entire Montenegrin economy and representing its common interests
I would like to point out the Chamber’s activities regarding digital transformation and green and circular economy, recognizing them as prerequisites for accelerated recovery, higher competitiveness and economic development.
We actively participate in the creation of curricula which educate future human resources with the knowledge and competencies needed to meet the challenges of modern digital and green business. The Chamber plays an important role in boosting cooperation between the state, and the scientific and business community in the development of innovative activities and the creation of an innovative society.
The Chamber has held the European Projects Fair in an effort to promote European values. What benefits does Montenegro have from EU support?
Recognizing the importance of implementing projects that are financed from EU funds through various programmes, the Chamber initiated the European Projects Fair in 2021. The intention was to present what we do when it comes to these projects, as well as to promote European values. The idea was supported by the Ministry of European Affairs and the Delegation of the European Union in Montenegro, which just validates the Fair’s quality. The implementation of projects in which the Chamber participates helps us to improve our own capacities and those of our members and also creates the opportunity for companies to be externally engaged in the execution of certain tasks.
We provide support to companies in the process of transition from linear to the circular economy and business transformation towards green and digital
I would like to single out projects that will get us closer to the young generations, which also imply significant financial assistance to schools along with the establishment of very useful cooperation between vocational high schools and companies, and facilitates the mobility of students. If we take into account that 50 institutions, organizations and companies, that had been implementing several projects, took part in this year’s Fair, we can conclude that Montenegro recognizes and uses the opportunities offered to it through this framework.
What are the projections for this year, taking into account the war in Ukraine?
The war that broke out in Ukraine at the beginning of this year has contributed to a significant slowdown in global growth, as seen in the latest reports of international institutions. The IMF has revised the global economic growth rate in 2022 to 3.6%, which is 0.8 p.p. lower compared to the previous report. Large increases in commodity prices and continued supply disruptions are pushing inflation up while reducing household incomes and corporate profits. New risks are coming from the escalation of conflicts and disruptions of critical energy flows.
Regarding the Montenegrin economy, the IMF has lowered its growth estimate this year from 5.6% to a moderate 3.8%, while in the next period, the IMF predicts a 4.2% growth. The World Bank has also lowered its forecasts for economic growth by almost one-third, and it is expected that the global GDP will grow at a rate of 2.9% this year. Given that inflation in many countries has reached record levels, and that supply is expected to grow slowly, there is a danger that high inflation will persist longer than currently forecast. Among the numerous risks that threaten global economic growth, the growing geopolitical tensions, financial instability, disruptions in the supply chain and the risk of stagflation, i.e. a period of high inflation and weak economic growth, stand out. The growth forecast for the Montenegrin economy has been lowered to 3.6% (2.0 p.p. lower) in 2022, i.e. 4.7% (0.1 p.p. lower) in 2023.
What kind of cooperation do you have with the Chamber of Commerce and Industry of Serbia and how can relations be even better?
We have high-level cooperation with the Chamber of Commerce and Industry of Serbia, just like with all the chambers of the Western Balkan countries. In addition to the idiosyncracies that our countries and economies have, we share similar concerns and challenges and we all strive towards the same goal – EU membership. In the case of the Chamber of Commerce and Industry of Serbia, apart from bilaterally, we also cooperate intensively through the Chamber Investment Forum ZB, which was formed on the sidelines of the Western Balkans Summit in Vienna in 2015. In addition to this, we are jointly implementing a number of projects financed by the European Union, and we are also preparing activities with which we will act synergistically when it comes to the green economy. The existing mutual commitment to fostering a good connection between our two economies and the willingness to exchange experiences in all segments are a guarantee that in the future our cooperation will further improve.
You are the first woman to ever helm the Chamber of Commerce of Montenegro. What kind of reception did you get when you were appointed to this position?
Gaining the trust of the business community to represent and lead the Chamber in the next four years makes me proud. It is also a pleasure, of course, that I am the first woman at the head of an institution that, for almost a century, has been bringing together the entire Montenegrin economy and representing its common interests. At the same time, I have an obligation and a motive to contribute to improving the Chamber’s work and position. On the back of the previous work and achieved results and through the modernization of its services, the Chamber will be a better and more efficient service to the Montenegrin economy. I think that success depends on the ability and willingness to work committedly and diligently and to take on the burden of responsibilities and decision-making even in complex situations, irrespective of gender. I enjoy the trust of those who elected me to this position and I try to cultivate an open relationship with them. I am also open to receiving criticism, suggestions and commendation.
You have announced that the structure of the Montenegrin economy has to change. What results do you predict for this year?
Prices of all types of energy, raw materials and agricultural and food products have risen sharply and there has been a threat of shortages several times, which further highlighted the need for structural reforms, i.e. the diversification of economic activity in our country, as a prerequisite for increasing the economy’s general resistance to external shocks. We see the greatest potential for creating more sustainable growth in four areas, which the Smart Specialization Strategy defines as key priorities: sustainable agriculture and the food value chain; energy and sustainable environment; sustainable and health tourism; and the ICT sector as a horizontal priority.
We have high-level cooperation with the Chamber of Commerce and Industry of Serbia, just like with all the chambers of the Western Balkan countries
Prerequisites for the growth and sustainable development of domestic companies include an adequate regulatory framework, easier access to financial resources, combatting shadow economy and harmonization of the education system with the needs of the labour market. Providing support to the economy is necessary in order to continue the reforms related to green transition, energy efficiency, digitization and food production. This year, we need to work on adjusting, that is, directing the legislative framework that should be stimulating for the development of priority areas. In the current geopolitical moment, green energy is especially important for Montenegro, as we have a great potential for the production of such energy, while the development of tourism and agriculture must go hand in hand.
It is very important that the main drivers of economic growth in Montenegro, tourism and foreign investments, recorded growth this year so far. Namely, in the first four months of this year, the number of tourists in collective accommodation increased by 171.9%, while the number of overnight stays went up by 197.3%. The foreign direct investment influx during the first four months of 2022 was 28.8% higher than the previous year, while net investments were 77.9% higher. This was also reflected in the labour market, so the average number of employees in this period went up by 23.2%, while the number of unemployed persons in late May declined by 14.5%.
We can expect the Montenegrin economy to continue its recovery from the deep recession caused by the Covid-19 pandemic.