Serbia’s GDP decline in the second quarter is likely to be 8-10%, while Serbia’s GDP is estimated to fall by about 3% year-on-year, which will be one of the lowest rates of decline in Europe, according to the latest issue of the Quarterly Monitor trends published by the Faculty of Economics in Belgrade and the Foundation for the Development of Economic Sciences (FREN).
In reference to the statements of state officials that Serbia will fare better in the crisis than other European countries, it is stated that two important facts are being ignored.
The first is that the main reason for Serbia’s somewhat better results is that Serbia is one of the poorest European countries.
This means that the Serbian economy relies to a greater extent on the production of existential products for which demand has not dropped significantly in the crisis (agriculture, food industry, household chemicals, etc.).
Unlike Serbia, developed European economies rely more on the production of durable and investment products (eg car industry) for which demand has fallen sharply – and therefore the decline in their GDP and job losses are likely to be significantly higher than in Serbia.
Second, a fall in GDP of about 3% in 2020 will lead to macroeconomic imbalances (high deficit and huge increase in public debt, loss of a certain number of jobs) and will be painful for a good part of the economy and population, warn professors from the Faculty of Economics in Belgrade.
The authors of the analysis estimate that the biggest decline in economic activity this year will be in April, and that the gradual recovery of the economy will begin in May.
The economic recovery will continue during the third and fourth quarters, but the level of GDP in them will be lower than in the same period last year.
In the next year, provided that the recovery of European economies occurs, Serbia could achieve growth of 4-5%, which means that it would exceed the level of GDP by 1-2% before the pandemic observed on the basis of annual data, GDP trends in the period 2019-2021.
Recovery resembles the Latin B, while based on quarterly data the trajectory would resemble a tick mark. This means that 3-5 quarters of recovery will be needed to compensate for the decline in the second quarter of this year, Nova Ekonomija reports.
