The Vienna Institute for International Economic Studies (WiiW) forecasts that the growth of Serbia’s gross domestic product (GDP) will amount to 1.3 percent this year, and for now it is the least optimistic institution in this regard. On the other hand, the National Bank of Serbia has not yet changed its estimate that GDP will grow between two and three percent this year.
On Monday, the Republic Institute of Statistics published a flash estimate of GDP growth in the second quarter and it amounts to 1.7 percent, which is a whole percentage point more than in the first quarter, when economic growth was estimated to be 0.7 percent. and that compared to the last quarter of 2022, a decrease of 0.2 percent was recorded.
This would mean that we are halfway through the year at 1.2 percent GDP growth, or almost at half of the 2.5 percent growth projected for 2023 by the republican budget and at what the Council for the Coordination of Activities and Measures for GDP Growth is counting on chaired by Prime Minister Ana Brnabić.
At the last session of the Council, it was noted that industry, construction, agriculture and processing industry, key areas for achieving economic growth, made great progress in the second quarter of this year.
On the other hand, at the beginning of July, a report of the Vienna Institute was published where, in the part that refers to Serbia, WiiW economist Branimir Jovanović writes that “inflation has started to slow down, but much more slowly than elsewhere in the Western Balkans, thanks to the government’s decisions that from the beginning of the year increase the price of electricity and gas and lift price restrictions on certain basic food items, which were imposed last year”.
High inflation, as they stated, damaged real incomes in the first quarter of this year. Consumption, both public and private, was reduced. As a result, the GDP increased by only 0.7 percent in the first quarter, which is less than the previous expectation – it is stated in the WiiW report, in which the forecast of this year’s inflation for Serbia was revised by two percentage points upwards, to 12 percent, while in at the same time, the GDP growth forecast was revised down by 0.2 percent, to 1.3 percent.
The Erste Group estimate that the economic growth of Serbia will amount to 1.6 percent this year has also arrived from Vienna. At the presentation of the group’s half-yearly business results, it was announced that this year the average GDP growth of our region will be one percent, and that of the Eurozone will be 0.5 percent.
The International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD) estimate Serbia’s GDP growth at two percent, which is what the authors gathered around the “Quarterly Monitor” expect for now.
“GDP growth is expected to slow to two percent in 2023, due to the implementation of stricter monetary and fiscal policies, still high inflation, weak external demand and tightening global financial conditions.” In the medium term, however, GDP growth should return to around four percent,” says the latest IMF report published at the beginning of July.
Sign up for business updates & specials.
