Serbia’s economic growth has been steadily rising for the 18th quarter in a row, starting from the pre-crisis period, i.e. the beginning of 2008, according to the National Bank of Serbia report.
This growth, however, is far from the desired development level which is the reason why the countries of the former Eastern bloc are so much ahead of us in economic progress.
According to the central bank’s calculations, economic activity for the first three months of this year, measured by GDP, was 14% higher than 11 years ago. While the GDP growth in the first quarter of this year was 0.9%.
The National Bank of Serbia, IMF and the World Bank have all estimated that GDP growth in Serbia in 2019 will be 3.5%, while the European Commission, the Fiscal Council and domestic economists expect lower economic growth, at about 3%.
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The European Commission has recently forecast that Serbia’s economic growth will slow down compared to 2018, amounting to 3.1% in 2019.
Even if the prognoses of the NBS and international financial institutions come true, the growth rate of around 3% is still low for Serbia, despite many countries in the EU having even lower growth. This is often the argument that the ruling party uses, but an incomparable comparison.
Serbia’s economic growth is not comparable with economically developed European countries such as Germany or the Netherlands, as European countries at a lower level of development must have significantly higher growth rates. In other words, Serbia, similar to the countries of Eastern Europe, should record a much higher rate of at least 5% growth.
Corruption, not adhering to the rule of law, insufficient private and public investments, and a bad educational system are the reasons for Serbia’s low economic growth, according to the analysis of the Fiscal Council called “Why Serbia’s economic growth is lagging behind”.
The authors of the analysis state that, according to the economic development and living standards of the population, Serbia is at the very bottom of the European countries.
Although Serbia should have gradually compensated these backlogs with faster economic growth, this did not happen. On the contrary, the CEE countries had a significantly faster economic growth over the past decade compared to Serbia, so they further moved forward in economic development.
GDP per capita in Serbia is half the amount of ones in the countries of Central and Eastern Europe (CEE) and is only a third of the GDP per capita in developed countries of Western Europe. At the beginning of the decade, GDP per capita in Serbia was close to 62% of the CEE average, and in 2017, it fell below 55%.
(Nova Ekonomija, 24.05.2019)
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