The value of manufactured goods and services in the first quarter of this year in Serbia increased by 0.7 percent. With the forecast that inflation will be around eight percent by the end of the year, the Government expects annual economic growth of 2.5 percent. The state says that the results are better than expected and that the drivers of growth are industry and agriculture.
A country like Serbia needs economic growth of five percent per year. But in the time we live in, even a result twice as low is good – say both the state and the profession.
“The most dominant growth was achieved by the ICT sector, i.e. information and communication technologies, followed by tourism, as well as administrative and professional services. On the other hand, we also had a significant contribution from industry. Mainly thanks to the stabilization of electricity production in our electricity industry system and thanks to the opening of new jobs in highly productive branches”, said Saša Stevanović, State Secretary in the Ministry of Finance.
The profession warns to be careful, until the end of the year we have two more quarters and many risks. Agriculture depends on the weather forecast, and industry depends on foreign investments, which await the outcome of the negotiations on Kosovo and the end of the war in Ukraine.
“If you go to the level of the processing industry, it is smaller, 1.5 percent compared to the same percentage last year. The processing of basic industrial metals decreased significantly, the chemical industry decreased, but on the other hand, the activity that deals with the production of certain machines increased. Devices and equipment. On the other hand, when we talk about agriculture, the results have yet to be seen because the harvest is coming, but the fact is that a higher yield is expected this year,” said Bojan Stanić from the Serbian Chamber of Commerce.
Less investment as a result of the increase in interest on loans
Smaller investment in processing is not a surprise. The result is an increase in interest on loans, which curbs inflation.
“We have a well-managed monetary policy, a rigorous policy that also curbs inflation, so everything indicates that the trend has reversed and that we will reach that eight percent at the end of the year,” Stevanović said.
“It will probably be at an average level, at almost the same level as it was last year, around 12 percent, which will continue to reduce the purchasing power of the population, and that is what most businessmen are warning about,” Stanić pointed out.
They warn that they need the market more than capital, and two-thirds of our trade is related to the European Union, which, after Russia and Ukraine, is the biggest victim of their conflict. That is why it is good that we have trade agreements with Russia and Turkey, that we are negotiating with China. It will also bring new investors.
Although their goal is not the development of Serbia but profit, we should not give up subsidizing them. Although there are increasingly loud suggestions that it is more useful to redirect that money to agriculture.
“Each of my Zlatibor peasants will give no solution. Imagine investing that money in encouraging some capacities for the production of raspberry products. Well, last year we had an extremely good price, now some people have started to plant new ones, already this year the question is will we be able to sell half of it,” said professor Ljubodrag Savić from the Faculty of Economics in Belgrade.
The risks are great, but the opportunities are greater. We cannot compete with Germany in car production. But we have horses to race: the IT sector and agriculture.