Serbia’s economy will record a moderate decline of 1.8 per cent this year, thanks to the relatively short duration of the strictest lockdown measures due to the coronavirus pandemic and significant government support for mitigating the consequences of the crisis, the European Commission (EC) estimates on Thursday.
According to the Autumn Economic Forecasts for European Union Member and Candidate States, Serbia’s returns to the pre-coronavirus crisis and economic growth are expected in 2021, at 4.8 per cent, and it will be based on investment and personal consumption.
For 2022, Serbia is projected to grow by 3.8 per cent.
The EC report on Serbia says the economic downturn and significant fiscal measures to mitigate the effects of the crisis will result in a significant but temporary increase in the general government deficit in 2020.
The external debt ratio is also forecast to grow by about ten percentage points and then to decline slightly.
The Commission also says the country’s GDP has fallen 6.4 per cent in the second quarter due to measures during the coronavirus pandemic, after strong growth of 5.1 per cent in the first quarter of 2020.
The decline was due to a massive fall in personal consumption and investment, which was partially offset by higher government spending and a positive contribution from net exports.
Short-term indicators reported that economic activity was recovering during the summer. It is also expected that the share of tourist services, although relatively small, as well as the good agricultural season would limit the decline of Serbia’s economy in 2020.
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The EC adds there is a high level of uncertainty about the growth perspective in Serbia, with risks due to the pandemic and an uncertain pace of European recovery.
The crisis due to the coronavirus will worsen the general government deficit in Serbia, which will be around 9 per cent of GDP in 2020, while it was almost in balance a year earlier.
With the projected recovery, the abolition of measures to mitigate the consequences of the crisis and the increase in tax revenues, Serbia’s deficit of Serbia, according to the EC, will fall to about three per cent of GDP in 2021 and 2.5 per cent of GDP in 2022.
The EC forecasts that Serbia’s public debt will rise to 61.5 per cent of GDP in 2020 due to a more massive deficit and a fall in GDP, and then will start falling by about one percentage point a year in line with the economic recovery and smaller deficits in 2021 and 2022.
(Vecernje Novosti, N1, 05.11.2020)
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