In a January report on the global economic outlook, the World Bank estimated Serbia’s economic growth in 2019 at 3.3 percent, while the forecast for 2020 is 3.9 percent, which is below the expectations of the Serbian government and the Bureau of Statistics.
A few days ago, the Republican Bureau of Statistics estimated that in 2019 gross domestic product had increased by four percent.
According to estimates by a World Bank report released, Serbia’s economic growth was among the weaker in this part of Europe last year, that is, in the region of Europe and Central Asia, which includes Eastern and Southeastern Europe.
Not counting the two largest economies in the region, Turkey that did not even have growth in 2019 and Russia whose growth is estimated at 1.2 percent by the World Bank last year, most other countries have had solid GDP growth.
While Central Asian countries grew at a rate of five to seven percent, in Eastern Europe, Hungary was at the top with 4.9 percent and Poland at 4.3 percent, with the World Bank estimated to have higher growth than Serbia (3, 9 percent) and Bulgaria (3.6 percent), while Croatia and Albania lag behind with GDP growth of 2.9 percent each, BiH and Northern Macedonia with 3.1 percent and Montenegro with 3 percent.
Interestingly, such a World Bank forecast comes after a report analyzing the potential of the Serbian economy to reach and maintain GDP growth rates as high as seven percent over the longer term. In an interview, Finance Minister Sinisa Mali said in a single interview that the country’s plan is to reach that seven percent within three years. The question is how much confidence in this international institution in our administration that they will implement the recommendations given in that analysis, given that they forecast economic growth of four percent for both 2021 and 2022.
In a brief look at the Western Balkans, World Bank experts suggest that the slowdown in our economy has been affected by slower industry growth and slower export growth.
Yet the outlook for the global economy is even bleaker. Namely, the World Bank forecasts economic growth of 2.5 percent for 2020, which is only 0.1 point more than last year, which was the worst since 2008.
In addition to highly developed countries, above all the US and EU whose growth will underperform, developing countries, among which we are, will also have growth below potential. Ever since the global financial crisis, developing countries have been recording a slowdown in productivity growth, despite the largest debt accumulation in the last fifty years.
World Bank experts noted the fourth and largest wave of borrowing since the 1970s. According to the report, the first three waves ended in sharp financial crises in most developing countries.
Record low interest rates at the moment make this debt not risky, but at the same time these countries are facing a weak growth prospect as well as growing threats from the global economy, with the potential for an escalation of trade wars, primarily between the US and China, writes Danas.
