Not many countries during the global crisis caused by a coronavirus pandemic will have minimal economic growth.
Developed countries, such as the United States or Great Britain, France or Germany, already had a decline in the first quarter of this year, ranging from 4 to 9 percent. Serbia, at the same time, has a growth of 5%.
Can Serbia record positive economic growth at the end of the year? Is it decisively influenced by foreign direct investment or economic measures of the Government, and can we avoid the scenario predicted by some economists, that we will pay for the world crisis instead of developed countries?
The answers to these questions were given for TV Prva by the president of the Association of Economists of Serbia, Aleksandar Vlahovic.
“The first quarter is not the most relevant data for making final conclusions about what the economic trends will be by the end of the year, not only in our country, but in the whole world. I want to say that Italy, Germany and some other countries entered the corona crisis much earlier, so it is logical that Italy has a drastic decline in the first quarter, and is expected to have a decline of five percent by the end of the year, the UK more than six percent, the US also six or seven percent, Germany 3.5 percent,” said Vlahovic.
He added that we had an exceptionally good January and February and that the growth path of the overall economic activity from the last quarter of last year continued, and that it was to be expected that we would not have a decline in the first quarter.
“However, the April data already say something else. In April, there was a drop in industrial production of some 17-18 percent, the fall in the processing sector was more than 20 percent. The car and textile industry was particularly affected,” Vlahovic said.
He emphasized that we should wait for the second quarter, and only then make the final assessments when it comes to projections in Serbia by the end of the year.
“Serbia did face the crisis in a much better fiscal position than, for example, it was in 2014. Total public debt was reduced to 50 percent, we had a budget surplus and this allowed us to implement a package of measures that costs about 11 percent of GDP In other words, it will increase the total public debt from the current level of 50 percent to over 60 percent, but there is room and we are still in these Maastricht criteria. I would say, fortunately, the tourism sector does not dominate, as is the case in Croatia, Greece, Montenegro, so the blow that our economy will suffer will not have much impact on the overall economic activity and the final amount of GDP,” said Vlahovic, B92 reports.
