Montenegro's Biggest Exporter Facing Bankruptcy, Threatens Smaller Companies

The credit crunch and falling price of metal has left Montenegro's biggest exporter: Kombinat Aluminijuma (Aluminium) Podgorica (KAP) facing bankruptcy. The company had been losing $1,200 on every tonne of produced material, and efforts are currently under way to save the factory, like suspending workforce failed to have the desired effect.

However, if these measures fail, the company threatens to pull down 100 smaller companies with it. That said, Small and Medium sized enterprises are the biggest benefactors of EU assistance, it is likely they will step in to prevent this.

Though a similar story is being told in the metal industry around the world, with KAPs decline the Montenegrin government will likely now be forced to admit recession is inevitable and seek IMF assistance.

Montenegro will then become the latest promising Eastern European economy forced to seek assistance from the IMF, most recently the IMF stepped in to help Bosnia, in what some think prevented the entire collapse of the Bosnian state, but maybe that is over dramaticised.

Montenegro has a massively growing tourism, but the effect the credit crunch has had on this is yet to be revealed. Montenegro's economy has grown rapidly in the last few years, and its declaring independence from Serbia in 2006 put it back on the radar of overseas property buyers.

Many of the off plan developments authorised languish un-started because f the slow planning procedures, meaning many developers are holding sizeable land-banks. This gives the Montenegro property market an elasticity when the recovery begins, in that cheap land will be aplenty for developers to build and things should really pick up in the country.