EC predicts GDP growth of 1.1 percent in Serbia

EC predicts GDP growth of 1.1 percent in Serbia

BRUSSELS -- Serbia's GDP will increase by 1.1 percent this year and will rise by 1.9 percent in 2015, the European Commission (EC) said in its latest forecast.

Despite the new package of fiscal consolidation measures in 2014, the total expenditures and Serbia's budget deficit will remain exceptionally high due to higher payments for loan interests, investment costs, new subsidies and social expenses, the EC stated.

The document added that a lower inflation rate than originally planned would also exert a negative influence on government revenues and contribute to the creation of financial pressures.

According to the assessments of the EU executive body, the fiscal situation in Serbia will remain grim in 2015 as well because higher payments on grounds of loan interests and a large share of non-mandatory expenditures pose limits for the flexibility of consumption.

Personal consumption could drop by 1.1 percent this year and by another 0.5 percent in 2015, the EC assessments show.

The unemployment rate in Serbia totalled 22.1 percent of the working age population in 2013 and in 2014 it should increase to 22.6 percent. In 2015, it will drop to 22.5 percent.

The GDP growth in Serbia surpassed the expectations in 2013 totalling 2.5 percent, and the greatest contribution to such results came from the export increase of 16.6 percent on the annual level, states the report.

Despite the positive data recorded in the fourth quarter, the increase of public and personal consumption was negative and their drop totalled 1.7 percent and 1.5 percent respectively for the entire year of 2013.

After several months of increase, real...