The day before yesterday, the Ministry of Finance and the National Bank of Serbia revised their estimate to minus one percent. On the same day, the European Bank for Reconstruction and Development published its growth forecasts for 2020, which are not even close to being optimistic. They worsened the forecasts for most countries, while they left an estimate for Serbia from May, according to which the decline will be 3.5 percent. A few days ago, the specialized macroeconomic publication Quarterly Monitor also kept the estimate of a decline of three percent, while a few weeks earlier, the macroeconomic team of Erste Bank estimated the decline at one percent. This difference is not negligible at all and with a GDP of 40 billion euros it amounts to about a billion euros.
Sasa Djogovic, the author of Macroeconomic Trends in Serbia, points out that 2.5 percentage points is a pretty big difference in assessment, especially because we are in one quarter by the end of the year.
“My estimate from before is a drop of three percent, but due to a better agricultural type, I revised the estimate that GDP will fall slightly below three percent. The biggest uncertainty is what will happen with the construction in the fourth quarter, since last year the construction of the gas pipeline contributed to the great growth of this area, and on the other hand, some other works were opened this year, such as the Kuzmin-Raca highway and the Moravian corridor. Although, after the Covid, I expect further growth of the construction industry,” notes Djogovic.
In Serbia, everything has become a reality and everything has been relativized
According to him, everything in Serbia has become a reality and everything has been relativized.
“I don’t know where the Ministry of Finance and the NBS see a drop between one and zero percent. We have now seen that it turned out that the Crisis Staff made decisions on measures based on inaccurate data. It cannot move forward on the basis of false data and analysis. With us, everything is overblown, we are the best in everything, leaders. Even today, we do not know how Air Serbia repaid the loan. They say it is from their own resources. The only thing left is to rely on our wit and common sense. Even now, we can believe in one of the two forecasts, the EBRD or the Government,” says Djogovic.
According to EBRD estimates, GDP in the Western Balkans will fall by 5.1 percent in 2020, primarily due to the collapse in tourism in Albania and Montenegro, which is attributed to a drop of nine percent. The decline in industrial production, reduction of foreign direct investments and remittances will also have an impact. For Serbia, it is estimated that from January to May, the drop in remittances is 30% compared to last year.
On the other hand, the government based its optimistic forecast on the year-on-year growth of the industry in August of 4.2 percent and a record agricultural yield.
According to the EBRD estimates, among the countries of Central, Eastern and Southern Europe, Lithuania will do best in 2020 with a drop of two percent, followed by Poland and Serbia with minus 3.5 percent. It is interesting that the EBRD significantly reduced the recovery rates in the next year for the entire region from 4.8 to 3.6 percent. For Serbia, the estimate was reduced from six to three percent due to uncertainty regarding the movement of the pandemic in the next year as well, BiF reports.
Recent GDP growth projections
EBRD -3.5%
Erste Bank -1%
Government and NBS -1%
Quarterly monitor -3%
