Construction and agriculture biggest driving forces behind Serbian economy

In the first six months of this year, Serbian GDP grew by 4.5% and with the construction and agriculture being the main driving forces behind the country’s economic growth – economic analysts say.

As the Minister of Finance Siniša Mali says, this is the highest growth rate for a six-month-period in the last 10 years. According to the analysis of the line ministry, the strongest year-on-year growth was recorded in the construction sector – 23.1%. This is due to the acceleration of implementation of the state-funded infrastructure projects, as well as the boost in private construction activities. Also, Mali pointed out that Serbia had a good agricultural season, which generated an 11.7% year-on-year growth.

Growth in trade, tourist services and the information and communication technologies sector has provided a year-on-year growth in the service sector of 3.4%, while industrial production has recorded an increase of 2.5% compared to the same period of the previous year.

Economist Ivan Nikolic underlines that a rapid development of the construction sector, which amounted to 25% in the first quarter, contributed the most to the GDP growth, followed by agriculture.

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“In the first quarter, agriculture grew by six percent, and now it’s in double digits, and it continues to grow. These are the two most important sectors. We also have a significant growth contribution from the service sector, especially retail trade. But the most important focus is on the construction industry, which grew thanks to significantly larger investments in both the state and the private sector”, says Nikolic.

He adds that the state has significantly increased investments, which is evident through the capital expenditures, especially those in road infrastructure.

“This is a small part of total investments. The larger part is private investments, and they are continuing to grow. Residential construction and the construction activity in the commercial sector are on the increase. There is also the Belgrade Waterfront project”, adds Nikoli.

According to him, Serbia had also a good agricultural season, regardless of the unfavourable weather in the last month.

“This growth is mainly notices in the yield of maize and sunflower, which has gone well this year”, says Nikolic, adding that it is now certain that we will have a GDP growth of at least four percent this year.

Economist Mladjen Kovacevic agrees that the two sectors contributed most to the economic growth.

“The first half of the year was exceptionally favourable for agriculture with the total production being considerably higher than in 2017. Also, it is also extremely favourable for the development construction. Climatic conditions went hand-in-hand, especially in February and March, which meant more work was done and more investments have been made”, Kovacevic underlines.

On the other hand, the Belgrade Faculty of Economics professor, Ljubodrag Savic, points out that observing a shorter period time in relation to the other short period of time is not methodologically correct.

“Last year we had problems with industrial production during the winter, and now we have a growth of 2.5 percent. When we compare the two, the result is not so good. The point is that in 2017, the statistical base was lower, and when you have such a situation it is not difficult to record growth”, Savic said.

He points out that we should wait until the end of the year to sum up results, especially when it comes to agriculture.

(Blic, 02.08.2018)



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