International Monetary Fund (IMF) mission chief Jan Kees Martijn said in a press release on Friday that Serbia's GDP will record a drop of 1.5 percent this year and will see growth of five percent in 2021.
The press release said that economic activity rebounded following a sharp contraction in the second quarter of 2020 caused by the COVID-19 pandemic with monetary and financial measures and a large fiscal package playing a key role in supporting the economy.
„Real GDP growth is now projected to contract by 1.5 percent in 2020 and rebound to 5 percent in 2021,“ it said, adding that the revised prediction is based on recent data showing a faster recovery than anticipated.Martijn warned that the outlook remains highly uncertain, reflecting the unpredictable course of the pandemic and related economic disruptions in Serbia and its trading partners.
Inflation has remained low and is expected to stay within the lower half of the NBS inflation target range in 2021. The banking system has remained stable, liquid and well capitalized, he said and added that tax revenues have been stronger than expected.
„The overall fiscal deficit is projected to be less than 9 percent of the GDP in 2020, with public debt staying below 60 percent of GDP,“ he said.He said that the mission agreed with the authorities on the key parameters of the 2021 budget.
“After some delays due to the pandemic, the implementation of structural reforms needs to be accelerated to secure strong and stable growth in the medium term. Ongoing efforts are needed to strengthen the tax administration, public investment management, and the monitoring and management of fiscal risks. Reforms of public sector wage and employment frameworks, which have faced substantial delays, should be completed. Enhancing the corporate governance of public enterprises, including EPS, and developing Serbia’s capital market remain vital,“ the press release said.