EBRD: Serbia’s recovery rate lower than 2020 drop in GDP

The bank said on Thursday that Serbia’s GDP is expected to “decline by 3.5 percent in 2020, recovering by 3.0 percent in 2021”. It added that “the risks are weighted to the downside, especially if stricter social distancing measures are implemented in Serbia and in key trading partners”.  

“The impact of Covid-19 is less severe than in some peer countries, partly because of the high contribution of manufacturing of basic products to the overall output,” the EBRD said and added that the second quarter of 2020 saw a fall in economic activity of 6.5 per cent year-on-year on the back of stringent lock-down measures, bringing overall growth in the first half of 2020 to -0.9 per cent year-on-year.  

“Government measures to fight the effects of Covid-19 have focused mainly on preserving employment and increasing liquidity for companies, but the cost of these measures has driven public debt to 58 per cent of GDP by mid-2020, around five percentage points higher than at the end of 2019,” it said.  

“FDI and workers’ remittances both fell by about one-quarter year-on-year in the first half of the year. Inflationary pressures have remained subdued, with the inflation rate averaging 1.5 per cent year-on-year in the first seven months of 2020. GDP growth was strong in the first quarter of 2020, at 5.0 per cent year-on-year, driven by consumption, government expenditure and investment. At the same time, exports growth softened to 3.1 per cent year-on-year, the slowest quarterly rate since 2014,” the EBRD said.