The IMF expects Serbia’s economic growth to accelerate from next year

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Sebastian Sosa, regional director of the International Monetary Fund (IMF), said that Serbia is projected to grow 3.5 percent of gross domestic product this year, but that it is expected to accelerate and grow to four percent next year.

This would be a consequence of strong domestic demand, but also export and FDI growth, and we are projecting a reduction in unemployment and a stable fiscal position for the country, Sosa told FoNet during a break of the panel of the Summit of Economic Leaders of the Region organized by NIN.

Serbia has made good progress in terms of macro-stabilization and reducing volatility, and we expect a stable fiscal situation next year, a low deficit of 0.5 percent of GDP, which is consistent with the objective of reducing public debt, which is important for the stability of public finances, he said.

Sosa also said that inflation remains at a stable, low level, so the IMF does not expect challenges when it comes to internal circumstances, but said there are risks from the external environment, ie weak economic activity of the European Union, which is the largest trading partner and the largest foreign direct investor of Serbia.

Regarding public sector wage growth and pension indexation, Sosa said those increases were in line with the planned 0.5 percent of GDP deficit and consistent with a reduction in public debt.

We believe that the level of public sector wage increases is higher than we have suggested, but that does not jeopardize macroeconomic and fiscal stability, although the increase may have been lower, Sosa said.

We understand the need to increase salaries for some sectors and some categories in emigration are difficult to retain in the public sector, but there is a big increase in that sector, he reiterated, noting that the private sector is seeing wage growth on a sound basis.

Sosa said that with inflation at one percent, there was a significant increase in total wages, both in the public and private sectors, of almost nine percent.