Brussels – In their report, the Directorate General for Economic and Financial Affairs of the European Commission predicts “obvious economic growth” and continuation of “economic expansion” in Serbia.
“We expect the economic expansion to continue in the following years, which is mainly based on recovery of private and public consumption,” according to the Report for Q2 2018.
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Directorate General for Economic and Financial Affairs of the European Commission states in their institutional document dedicated to economic reform programs of countries of the Western Balkans and Turkey in 2018 that economic growth is expected to be obvious in the upcoming period in Serbia.
“Even though growing demand will lead to price increases, inflation is expected to remain close to Central Bank’s target. Foreign direct investments are expected to stay high and to completely cover the current deficit on the account,” according to the report.
Report states that in the period from 2014 to 2017, state budget went from deficit to surplus, and that the 2018 budget is “even more ambitious when it comes to resolving the consequences of the crisis.”
“The expected mid-term deficit of 0.5 percent of GDP is sufficient to secure fiscal sustainability and further lowering of state debt, which is still relatively high and amounts to over 60% GDP,” the report states.
When it comes to European recommendations for the economic sector in Serbia, Directorate General for Economic and Financial Affairs states that maintaining a good macroeconomic policy and continuation of structural reforms are necessary.
It states that the state debt is still high, and that fiscal risks are still present due to unfinished reforms of key public sectors. The still incomplete privatization of state enterprises is regarded as potential economic risk.
“Privatization and reconstruction of state enterprises must be continued without stalling, and the energy sector is the most critical,” Directorate General for Economic and Financial Affairs states.
Serbia is also recommended to increase capital expenditures with a better system for planning and execution.
“Serbia needs to develop a unique mechanism for prioritization and monitoring of all investments, regardless of the source of financing, as predicted in the public finance management reform programme,” the Report states.
The 2018 Economic Reforms Report states that business environment in Serbia has been improved, but also that there is still an unfair competition between public and informal sector. The main source of financing of SMEs in Serbia are still their own resources.
“Trade integration with EU is increasing, but it remains obstructed by many non-tariff barriers, especially in the field of phytosanitary protection,” the Report states.
The Report also calls on a more significant reform of the work market, stating that “young people and women didn’t benefit enough from positive trends on Serbia’s work market in 2017”.
They insist on continuation of reform of the educational system.
When it comes to regional economic growth, average annual growth of GDP in the Western Balkans is expected to go up by 3.8% in the period between 2018-2020, from 2.5% from the previous two years.
The expected “solid recovery of Serbia” as “the greatest economy in the region” and country that has the strongest domestic consumption among countries in enlargement is also mentioned.
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