The IMF predicted a slowdown in Serbia’s economic growth

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The International Monetary Fund (IMF) predicted a slowdown in Serbia’s economic growth in 2022 to 2.5 percent, and in 2023 it predicts 2.25 percent.

This was announced in the report of the mission of that financial institution after the visit to Serbia, and it was confirmed that an agreement had been reached on a new two-year stand-by arrangement worth 2.4 billion euros.

Serbia, after a strong recovery from the pandemic, is now facing a negative global and regional environment, including Russia’s war in Ukraine, according to a statement published by the IMF.

GDP growth is forecast to slow to around 2.5 percent in 2022 to 2.25 percent in 2023 due to weaker foreign trade demand from European Union partners, along with rising energy prices, supply chain disruptions and recent drought, the IMF said.

The Fund has confirmed reaching an agreement with Serbia on a new two-year stand-by arrangement worth 2.4 billion euros.

“This arrangement would help to solve the emerging needs for external and fiscal financing in view of the challenging global economic environment, and would support the macroeconomic policy and efforts of the authorities in structural reforms, with a focus on the energy sector”, explained the head of the IMF mission, Jan Case Martein.

He stated that the Serbian authorities “intend to use the financial resources that will be available during the first part of the arrangement, and to treat the remaining access as a precaution”.

Implementation of the agreement requires the approval of the IMF Executive Board, which is expected to be considered by that body in December.

In its assessments after talks with Serbian officials, the IMF also states expectations that inflation in 2022 will be around 12 percent, fueled “mainly by the rise in food prices and global energy prices.”

“Inflation is predicted to slow down in 2023 and return to the National Bank of Serbia’s target in 2024”, the IMF estimated.

According to reports, significantly higher energy import costs are expected with a shortage of domestic electricity production, as well as a weakening of external demand, which will increase the current account deficit to around nine percent of GDP in both 2022 and 2023.

“Despite the unfavorable global environment, the stability of the financial sector was maintained and the exchange rate remained stable”, the IMF mission assessed, 021 writes.

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