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   Our client, Erste group, provides economic growth projection in the…

Aleksandra Kozić • Apr 02, 2020

Our client, Erste group, provides economic growth projection in the republic of serbia for current and next year

Of the countries of Central and Eastern Europe (CEE), Serbia’s economy will be the least affected by the coronavirus crisis (COVID-19), according to the latest analysis by the Austrian Erste Group.

“We expect the Serbian economy to enter a recession in the third quarter of 2020, followed by a sharp GDP growth of 4.7% in 2021. The Gross Domestic Product (GDP) of countries in the CEE region (Croatia, Slovenia, Romania, Slovakia, Poland, Hungary, Czech Republic) will fall by an average of 4.7% in 2020 due to the effects of the crisis, with the smallest decrease of 2.3% in Serbia” the report said.

“Closing the service sector for at least a month and a half will stop spending growth in categories such as restaurants, hotels and culture. Tourism-oriented countries such as Croatia and Slovenia will face a severe recession and in our estimations they will see a drop of 7.5% and 6.7% respectively”, according to analysts, and reported by the “See News” portal.

“The magnitude of the disruption to the coronavirus-induced economy has fueled the need for new revisions. We now expect the Serbian economy to see a 2.3% GDP decline in 2020, basing our estimate on the gradual normalization of the crises in the third quarter of 2020”, the Erste Group stated.

“Domestic demand will now rely heavily on GDP, while net exports should offer some economic relief, as was the case during the financial crisis of 2009 due to disruptions in the supply chain”, as stated, adding: “Serbia’s economy will recover strongly in 2021, with GDP growth projections of 4.7%”.

“Serbia’s exports not only exceeded estimates, but also recorded accelerated growth over the previous year, and as Serbia has managed to offset weaker EU core demand through stronger integration into CEE and Chine markets”.

“However, due to the impact of COVID-19 on domestic demand and global commodity prices, inflation should fall below the target range od 1.5% – 3.5% set by the National Bank of Serbia in March. The return to the target range is expected in the middle of the year”, the Erste Group predicted, adding: “ Our inflation is thus 1% per year on average in 2020”.