An average salary of more than 900 euro and pensions of more than 400 euro in 2025, as indicated in the Serbia 2025 economic programme, are absolutely feasible despite the ongoing crisis, said Finance Minister Sinisa Mali, adding that the state will invest 14 billion euro in infrastructure and that the epidemic “has only postponed the programme’s implementation a couple of months”.
The Minister’s optimism is not only valid for 2025, but also in the short term.
“We do not want to see GDP declining this year. If we succeed amidst the biggest economic crisis, we have won. If we succeed, we will go record a growth rate of 7.5%, which gives us the right to say that we are approaching the standards of developed countries very quickly,” said Mali, although, just a few weeks ago, he said that the budget review predicted a GDP decline of 1.8%, while the NBS forecasted a 1.5% decline.
Economists have a considerable amount of scepticism about the Minister’s promises or wishes both for this year and even more so for the next five years.
Economist Mladjen Kovacevic points out that politicians always give long-term promises.
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“No-one can predict what will happen with this crisis, especially in the eurozone, where our major trading partners come from. The situation in Germany and Italy is crucial for our industrial production, because, although they are formally managed as our companies, a large number of factories depend on production in these countries. Furthermore, I am convinced that the FDI influx will decrease due to the crisis in the EU,” Kovacevic points out, foreseeing a reduction in remittances in the next period due to a large number of Serbian citizens returning to foreign countries where they live and work.
“An increasing number of foreign experts say that if the pandemic dies down in two or three months, it will be two or three years before people start buying cars again, for instance. I am not even sure of such a rapid recovery in 2021, as announced by the IMF,” warns Kovacevic, adding that he believes that even the state authorities are not completely convinced of what they are saying, but it all serves to give the population a psychological boost.
When the Serbia 2025 programme was announced, stipulating substantial government investments and ambitious targets, many compared it to the national investment plan of just over a decade ago, which ended in failure.
Economist Ljubomir Madzar points out that the programme was not feasible even before the epidemic, let alone now.
“It is a fantasy without a basis in economic reality and it is not clear how growth rates and other related indicators were calculated. If there was a valid economic basis, then, along with the projection, they would also announce how they arrived at those numbers. However, apart from their wishes, they have offered us nothing else, no analysis, so there is no possibility of a more in-depth discussion”, Madzar points out.
Sasa Djogovic of the Market Research Institute also points out that, even without the crisis, this plan was difficult to implement, but also underlines that the state has no clear plan.
“The state should create a space for the development of nationwide entrepreneurship and ensure higher salaries in the private sector through fiscal relaxation. The opposite is true in our country. The public sector is growing and the private sector is suffocating. The state is trying to be the main player in the market,” says Djogovic, adding that, in terms of economic development, we have to rely mainly on domestic businesses, while foreign investments should be only viewed as a support to development.
This post is also available in: Italiano