The COVID-19 epidemic and isolation have put a strain on the economy, but the hardest blow is yet to come.
According to the Serbian Statistics Office (RSZ), industrial production in March was 0.1% lower than the same month last year. Compared to February, however, excluding seasonal variables, industrial production fell by 3.7% in March, while manufacturing production fell by 5.3%. In the first three months overall, industrial production grew by 4.4% compared to the first quarter of 2019.
These good results in industrial production, since the state of emergency was introduced on 15 March, have encouraged government officials to develop highly optimistic scenarios not only in terms of the GDP growth in the first quarter but for the year as a whole.
Last year in August, the Statistics Office announced that it would no longer publish the flash estimate of quarterly GDP, and the Statistics Office Director, Miladin Kovacevic, explained in early March this year that that figure is not a statistical but an analytical indicator.
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“Most countries in Europe do not calculate or publish such data, as this is not reliable information either for the public or for decision-makers, given the limited set of parameters considered. Therefore, the RZS has stopped publishing the so-called flash estimate,” Kovacevic replied.
However, on Friday, he said that the GDP grew by 5% year-on-year in the first quarter and even predicted that economic activity will also increase by about 1% in the second quarter.
The next day, the President of Serbia, Aleksandar Vucic, announced that this year, instead of negative indicators recorded in the rest of Europe, Serbia will come out of the crisis with a positive outcome.
“Our estimate is that we will end the first quarter with +5.1% and the second quarter with +1.1-1.3%, while the third quarter will be negative between 0.3 and 0.2%. We expect -0.9% also for the fourth quarter. This means that we will end the year with +1, not -3%. This will make us the best economy in Europe,” said Vucic.
This has surprised many economists because the data for the first quarter are very different from those of the EU, on which Serbia is heavily dependent, and because of these confident forecasts in a situation where all the world’s experts indicate uncertainty about the length of the pandemic and the duration of the economic crisis, there is scepticism among experts.
A few days ago, Eurostat, the EU’s statistical agency, published a flash estimate of GDP for the EU and the euro area, according to which GDP in the EU fell by 2.7% compared to the first quarter of 2019 and even by 3.3% in the euro area.
Milojko Arsic, professor at the Faculty of Economics in Belgrade, recalls that the economic recession did not start until mid-March after the introduction of the state of emergency, and that industry was slightly affected, unlike the service sector, which suffered most from the crisis.
He also points out that the forecast of 1% growth in the second quarter is even stranger.
“No European authority shows such confidence in future results. It seems that the forecasts do not show the real situation, but political opinion, as elections will soon be here,” said Arsic, adding that the real effects of the crisis will only be visible in the April, May and June data, and even the March data are not complete as many economic sectors are not include. He also thinks that economic activity will record a negative outcome in April, perhaps even a double-digit decline.
This post is also available in: Italiano