Serbia has the best economic results in the region.
The economies in the Western Balkans will return to economic growth this year, after last year’s worst economic downturn caused by the corona pandemic, but growth rates will not reach the level of the previous five years, the chief economist of the World Bank, Lazar Sestovic, announced today.
In a video presentation of the World Bank’s report on the Western Balkans, he reminded that the economic decline of the region, according to estimates, was 3.4 percent last year, which is significantly less than the recession in Central and Eastern Europe of 4.8 percent, or in European Union of 7 percent.
The region expects economic growth of 4.4 percent this year, according to World Bank estimates, and in 2022 and 2023, slightly slower growth of 3.7 percent.
As an encouraging fact, Sestovic pointed to a slight drop in unemployment in the region of 0.6 percent, from 13.5 percent in 2019 to 12.6 percent in 2020, largely as a result of increased inactivity, with total job losses in the Western Balkans that reached almost 70,000.
He pointed out that Serbia had the smallest decline in gross domestic product in the region and Europe in 2020, of only one percent, thanks to a generous government package of economic support worth close to 13 percent of GDP, which is in the rank of much richer countries. He added that Serbia’s growth of 5 percent is expected this year.
Sestovic emphasized that the reduction of the external imbalance, ie the deficit of current payments of Serbia, which fell to 4.3 percent, was a very favorable indicator.
He says that Serbia’s export results were much better than anyone expected, so that a slight decrease in exports was recorded.
– The conditions of exchange changed in favor of Serbia last year, the export prices of our products increased, which is good news, and the import prices fell – he stated.
He also stated that the year of the pandemic required significant budget allocations to support the economy and the population, which resulted in a budget deficit of 8.1 percent of GDP, after a long period of successful fiscal consolidation when the budget was balanced and even in surplus.
Commenting on the future economic prospects of Serbia, the chief economist of the World Bank said that in the medium term growth is expected to range between 3.5 and 4 percent, which will depend on interest rates in international markets, foreign direct investment, demand, remittances, etc.
He mentioned the low level of domestic private sector investment, the slowdown in accession negotiations with the EU due to the pandemic, as challenges, stressing the need to speed up the opening of new chapters.
In the end, Sestovic pointed out that it is necessary to orient the economy to a green transition, to minimize the consumption of natural resources, reduce pollution, which can be channeled by conditioning subsidies with these criteria, Srbija Danas reports.
