‘Quarterly Monitor’: Serbia’s GDP growth 3-4 instead predicted 6 pct in 2021

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Serbia's GDP growth in 2021 could be between three and four percent, the editor-in-chief of the economic publication "Quarterly Monitor", Milojko Arsic predicted on Tuesday, adding that "a smaller decline in 2020 increased the base with which the results from 2021 will be compared."

„It can now be seen that the epidemic and restrictions will be somewhat longer, and the recovery of European economies slower,“ he said, adding that meant the projected growth of the Government of Serbia of six percent could not be expected.

„The new anti-crisis package, planned in the first half of 2021, will increase public expenditures by about a billion Euros, so the fiscal deficit this year could increase to five or six percent of GDP, instead of the planned three percent,“ Arsic said.

He added that „it would be economically justified and fiscally responsible for focusing new anti-crisis measures only on citizens and companies that are strongly affected by the pandemic, instead of continuing non-selective programs.“

In 2021, according to him, public debt will continue to grow to nearly 30 billion Euros, while the share in GDP will probably exceed the level of 60 percent.

In the EU countries, the average drop in GDP was 6.2 percent, and only four European countries had a smaller drop than Serbia – Ireland, Norway, Lithuania, and Turkey, Arsic said

According to him, the growth of unemployment will be gradual and last for a year or two after the pandemic.

Wages in the private and public sector in Serbia, as he said, had a high, largely seasonal, growth in December 2020, after the 11-month stagnation.

„In 2020, foreign trade was reduced, so the deficit is slightly below two billion Euros, or 4.3 percent of GDP. It was about 1.1 billion Euro lower than in 2019,“ he said.

Arsic added the prices of imported products, primarily oil, have dropped significantly, while the prices of exported goods like agricultural products and metals have increased. That had affected the reduction of the foreign trade deficit.

He said the foreign direct investment fell by 20 percent in 2020, but was nonetheless more than enough to cover the current account deficit.

Arsic added the public debt at the end of 2020 reached 26.7 billion Euro, or 57.4 percent of GDP, and with the included unguaranteed debt of local governments, it exceeded 58 percent of GDP.

„The growth of public debt in 2020 was significantly lower than the fiscal deficit, due to the strengthening of the Dinar against the Dollar, as well as because revenues from concessions and privatisation financed part of the deficit,“ Arsic said.