The National Bank of Serbia has revised the central projection of real GDP growth for 2020 from minus 1.5 to minus 1.0%, with the possibility that the result will be better at the end of the year, despite the uncertainties and risks coming from the international environment, it was announced from the Governor’s Office.
– Taking into account the fact that the Serbian economy is recovering faster than initial expectations for the fourth month in a row, as well as the fact that in some parts of the economy the pre-crisis level of activity has already been reached, the National Bank of Serbia revised the central projection of real GDP growth for 2020 from -1.5% to -1.0%. When it comes to risks, the National Bank of Serbia estimates that the risks of the projection for 2020 are asymmetric upwards, ie it sees the possibility that the result at the end of the year will be even better than -1.0% – it is stated in the announcement.
On the other hand, it is added, “in terms of economic prospects for this and next year, we are faced with a pronounced and very often overemphasized pessimism of certain international financial institutions.”
– If it was understandable in March and April, when there were still no adequate economic indicators and when we were all faced with pronounced uncertainty regarding the course of the pandemic and its consequences, it is not understandable today, when we already have publicly available and internationally accepted and comparable macroeconomic and fiscal data for more than half a year – according to the NBS
The NBS reminds that in its latest macroeconomic projections for Serbia, the World Bank estimated that Serbia’s gross domestic product will be reduced by 3.0% in real terms this year, and the European Bank for Reconstruction and Development with an even more negative assessment that Serbia will year to record a real decline in gross domestic product of 3.5%.
– Although this is a relatively complex economic indicator, a simple calculation can lead to the conclusion that these are projections whose probability of realization is very small. It is only necessary to take into account the realization in the first half of the year and look at what needs to happen in the second half of the year in order for such a projection to be realized for the entire 2020 – it is stated in the announcement of the Governor’s Office.
According to official and internationally comparable data from the Republic Statistical Office, Serbia’s gross domestic product in the first half of the year decreased by 0.8% compared to the first half of the previous year, which is one of the first three results in terms of economic activity in Europe. The Serbian economy grew by 5.1% in the first quarter, while the decline in the second quarter, thanks to the timely reaction of economic policy makers, was limited to 6.4%, which is a much smaller decline in the second quarter than in most other European countries.
– Without entering into the technique of making projections, which differs for each institution, a simple arithmetic calculation shows that for a decline in gross domestic product of Serbia of 3% or over 3% in 2020, it would be necessary that the year-on-year decline in gross domestic product in the second half be higher than 5%, which would practically mean the same or similar result as in the second quarter, when for more than a month a significant part of the Serbian economy either did not work or worked with reduced capacity. Already on the basis of publicly available July and August data, we see that such a thing is practically impossible. Industrial production recorded year-on-year growth in both July and August, as is the case with retail trade turnover and labor market indicators, while exports are on the path to normalization. At the moment, taking into account the July and August data and very conservative assumptions for the rest of the year, the National Bank of Serbia estimates that gross domestic product in the second half of the year will be lower by 1.2% year on year, given the dynamics of construction activity, the pace of industrial recovery and the situation on the labor market – says the NBS.
– When observing the quarterly dynamics of gross domestic product, excluding seasonal effects, we estimate that Serbia’s gross domestic product in the third quarter will be higher than in the second quarter by over 6% seasonally adjusted, while in the fourth quarter we should expect additional economic recovery and growth of about 3% seasonally adjusted compared to the third quarter. This assessment shows that the recovery is certainly not complete and is not the same in all industries, but that for now in the case of Serbia it really has the shape of the Latin letter “V” – the statement concludes, recalling the key factors behind such economic results in Serbia and projections by the National Bank of Serbia on a package of monetary and fiscal measures and overall macroeconomic and financial stability, eKapija reports.
