It is only the third month of 2022, and international financial institutions are reducing the projections of global economic growth for the second time. At the end of January, the International Monetary Fund reduced its projection for the world from 4.9 to 4.4 percent, and a new downward revision is expected these days.
In a statement after the visit to Serbia, the IMF mission pointed out that the projections will be reduced by 4.5 percent due to the consequences of the war in Ukraine.
In anticipation of the IMF, other institutions have already reacted. UNCTAD yesterday reduced its global growth estimate for this year from 3.6 to 2.6 percent.
In addition to Russia, which will have a deep recession, the biggest slowdown in the economy will be felt in Western Europe, as well as Central, South and Southeast Asia. The UNCTAD report also states that developing countries will need 310 billion dollars to pay off the debts due this year.
Yesterday, the rating agency Standard & Poor’s broke the estimate of the growth of the Eurozone from 4.4 to 3.3 percent, while Moody’s was slightly milder with a decrease from 4.3 to 3.6 percent.
Most important for us, the German economy is in trouble, which is shown by the fact that the IFO Institute for Economic Studies has reduced the growth projection of this economy from 3.7 to 3.1 to 2.2 percent.
But what a crisis it would be if we weren’t the best at it. The President of Serbia, Aleksandar Vučić, as a guest on TV Prva, said that all estimates of growth are falling and that “it is our job to preserve such positive growth”.
“We have an estimated growth of 4.5 percent. It will reduce everyone by 1.5 percent, and it will reduce us by one percent. We will be an exception here, “Vucic said, speaking about the IMF.
Economists point out that it is too early to give any estimates and that there is complete uncertainty.
Ivan Nikolic from the Economic Institute points out that it is not known whether the conflict in Ukraine is coming to an end or will last.
“We don’t know if there will be a slowdown in Europe or maybe there will be recessions. If the spring sowing is not done in Ukraine, it means that the prices of agricultural products will be high for at least another year. When it comes to energy, it is difficult to change something relatively quickly. “The European economy is depressed,” he said.
This will certainly affect the Serbian economy.
“The stalemate in Germany and France will certainly stifle economic activity here, because we are a link in the supply chain. But I think that the negative effect will be stronger in the EU than in our country. The reason is primarily investments in infrastructure and construction. We are still underinvesting. However, there will be negative effects as well. “With the growth of material prices, we will be able to build less for the same budgeted money, there will have to be some reductions, so the construction industry will make a smaller contribution than it could,” Nikolic said.
Sasa Djogovic, the author of the bulletin Macroeconomic Trends in Serbia, also points out that we have a lot of needs for infrastructure, starting with sewerage and water supply and other communal infrastructure.
“Developed countries already have that. The other thing is agriculture. In our country, it has a higher weight in GDP, and although it will not contribute much to our growth, it will provide stability. Although the question is what the agricultural year will be like. In any case, higher prices of agricultural products on the world market will suit us “, he notes.
The prices of other raw materials, such as copper, can also help us.
“The price of copper is high and the export of Zidjin raises economic dynamics. Also, the EU has increased quotas on steel imports from Serbia, so that will be good for the ironworks in Smederevo. And both companies are in the hands of the Chinese, “he said.
On the other hand, our automotive industry, which consists of components, will certainly be hit by the stagnation of the automotive industry in Europe and the shutdown of capacities in Russia.
“For example, we exported a lot of tires to Russia,” he said.
Djogovic notes that it is ungrateful to give estimates when it is not known what the relations between the EU and Russia will be, or what will happen with gas supplies, considering that Russia asked for payment in rubles, and now the EU is waiting for an answer.
“If the supply of gas from Russia is interrupted, a large number of European countries will be in recession, and above all Germany,” he warns, adding that this will further affect the reduction of our industrial production.
“Our economy can be reduced by one, maybe 1.5 percent, but it is difficult to predict anything this early,” Djogovic concludes, Danas writes.
