European Commission forecasts 3.4% growth for Serbian economy

The Serbian economy is projected to expand by 3.4 percent this year and by 3.8 percent in 2023, compaed to the strong rebound of 7.4 percent in 2021, the European Commission said on Monday in its Spring 2022 Economic Forecast.

“Growth is expected to be mainly driven by private consumption and investment, but dampened by the economic fallout of Russia’s war of aggression against Ukraine. Inflation is set to peak in mid-2022 to then decelerate as of autumn 2022,” the forecast said adding that the general government deficit and the debt-to-GDP ratio, after decreasing to 4.1% of GDP and 57.1% respectively in 2021, are expected to record further gradual reductions in 2022 and 2023.

It said that the projected economic growth will mainly be driven by increases in private consumption and investment that are expected to outweigh the small negative contribution of net exports to growth and warned that the economic fallout of the war in Ukraine is expected to affect growth through higher commodity prices and reduced trade dynamics with Serbia’s main European Union trade partners.

“GDP growth in 2023 is projected to be mostly driven by private consumption and investment as well as an improving contribution of net exports due to increased export capacity supported by recent foreign direct investment in the tradeable sector,” the forecast said and added that the current account deficit is expected to rise substantially in 2022, mainly due to the higher cost of energy imports, and to broadly stabilise in 2023.

Serbia’s unemployment rate is expected to resume a gradual decline in 2022 and 2023.

Inflation reached 9.1% in March 2022 and is projected to peak in the middle of the year and is expected to decelerate as of autumn 2022.

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