The Impact of the Crisis on the EU Perspective of the Western Balkans
Montenegro The October 2008 crisis had an immediate, significant impact on the economy of Montenegro. As of the beginning of 2010, the areas of concern were as follows: • massive and broad-based deposit withdrawals; • deteriorated loan quality; • declining bank credit due to withdrawal of support from parent banks; • weaker interest on the part of foreign investors; • dropping asset prices, weaker balance sheets and reassessment of growth prospects in real estate construction activity; • a sharp drop in real GDP; • underemployment, rising part-time employment and substitution of domestic by foreign labour, effectively reducing employment by 14%; • nominal wages that moderated and declined in 2009 and 2010; • rising public and publicly guaranteed debt. In addition, problems in certain policy areas have resulted in the inability of the authorities to cope with the effects of the crisis: • Euroisation has limited the scope for the lender-oflast-resort operation of the central banks, especially for domestic banks lacking foreign support. • Loose fiscal policy in the past has left little room for taking countermeasures to the crisis. 66