Serbia’s economic growth lowest in the region

Despite the announcements in late last year and the beginning of this year, that the GDP in Serbia in 2017 will jump by 3% and maybe even 3.5%, Serbia is almost at the bottom of the list in Central and Southeast Europe in terms of GDP growth.

In the first quarter of 2017, the GDP grew by only 1.2% and in the second quarter, by 1.3%. In order to reach the projected 3%, Serbia’s economic growth needs to be at least 5%. Experts say that the chances of achieving this are minimal, but if we had an economy like Romania it could be doable.

Hungary, Poland, the Czech Republic, Slovakia and Romania have recorded the highest growth. Romania tops the list with the GDP growth of 5.7% in the first six months (last year, it was 4.8%). The Chief Economist of the Central Bank of Romania warned that the growth was not due to investments but to import.

Boris Dragovic, from McKinsey’s office in Serbia, says: “I believe that domestic demand will grow thanks to lower unemployment and low interest rates which speaks in favour of the 3% growth. On the other hand, the question remains how much will the investments going to contribute to growth in the next two quarters because there is very little transparency in this segment. Granted, the 3% growth is higher than the one in eurozone, but lower than the growth in Central Europe”.

Serbian government is still not worried because the state budget recorded a 33-billion-dinar surplus in the first six months of this year, while the primary surplus (excluding interest rates on public debt) amounted to over 104 billion dinars. Another negative effect of sluggish economic growth is a slow drop of the public debt’s share in GDP which, in the end of June, stood at 65.7%.

A professor at the Belgrade Faculty of Economics, Milojko Arsic blames the inadequate business climate, smaller FDI influx, and weaker implementation of public investments in the first six months for the slow economic growth. During the same period, the volume of construction work in Serbia dropped by 5% compared to the same period last year which has also affected the implementation of public investments.

(Danas, 19.08.2017)

This post is also available in: Italiano

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