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Home/News/The epidemic should not be the cause of the protracted recession in Serbia

The epidemic should not be the cause of the protracted recession in Serbia

The virus corona epidemic will have a significant negative impact on the domestic economy this year, but it is fortunate that Serbia is in a very good financial situation, both when it comes to budget and foreign exchange reserves, said Miladin Kovacevic, Director of the Republic Bureau of Statistics, told FoNet.
As one of the authors of the Economic Bulletin “Monthly Analyzes and Trends”, he reminded in a series of talks No Gloves that the European economy was not in a positive growth trend, even without the virus corona epidemic.
That is why it was expected to be transferred to the economies of the Western Balkans and Serbia, as the largest economy of the region, emphasized Kovacevic.
As a result, international financial institutions, such as the World Bank, cut their projected growth rate for Serbia from a planned 3.5 percent to 3.3 percent last year.
Serbia, however, managed to achieve 4.2 percent growth, thanks primarily to the significant contribution of construction and infrastructure works, Kovacevic said.
According to him, this trend of economic growth in Serbia was completely different from the trend that was present in the Eurozone.
He believes the situation in the Eurozone has been exacerbated by the epidemic and predicts that it will affect Serbia as well.
We still had high growth rates in January, the industry grew at a rate of 6.2 percent, while at the same time, the manufacturing industry recorded a 7.2 percent year-on-year growth, said Kovacevic.
It is certain that we will not have such growth rates in February, he said, noting that we will still see what those rates will be.
That is why it is important to preserve the growth potential that the Serbian economy has shown in recent years and to preserve economic activity, regardless of the negative effects that the virus corona epidemic will have, Kovacevic said.
He stressed that it would be good if the economic downturn due to the epidemic was in the form of the letter ipsilon, that is, when it emerged from the epidemic, it immediately followed by a resurgence.
It will also depend on the length of the epidemic. Looking at China’s Wuhan experience, the epidemic could have negative effects in the first and second quarters of this year, but it should not be the cause of some protracted recession, Kovacevic said.
According to him, the consequences of the epidemic will certainly be felt this year, but next year the situation should be normalized, and that the economies of both the Eurozone and Serbia should return to the levels they had before the epidemic.
The negative effects of the crisis due to the virus corona will be more affected by the small economy and those employees who have lower incomes, Kovacevic said.
He added that the criteria for who and how would receive assistance, whether from the Development Fund or from the budget, should be elaborated.
Kovacevic said that this needs to be done urgently, as there are already companies that are suffering the serious negative effects of this epidemic.
First of all, tourism, catering, and to some extent trade are affected. Although trade is being cautiously handled with these restrictive measures, Kovacevic said.
He is convinced that Serbia has been fortunate to have this epidemic at a time when it is in “the best financial situation, perhaps in the last 30 years.”
He specified that Serbia has between 1.4 and 1.5 billion euros in the budget, while foreign exchange reserves are close to 112.5 million euros.
Serbia can easily defend financial and monetary stability, Kovacevic said, noting that the foreign exchange market is stable and that the National Bank of Serbia easily maintains the stability of the dinar exchange rate. On fiscal policy, he welcomed the decision to increase salaries for healthcare professionals by 10 percent, Danas reports.