EC: Serbia to record 1.1 per cent growth this year

BRUSSELS - Serbia's GDP will increase by 1.1 per cent this year and it will rise by 1.9 per cent in 2015, the European Commission (EC) latest spring forecast shows.

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 in its latest report, adding 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 per cent this year and by another 0.5 per cent in 2015, the EC assessments show.

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

The GDP growth in Serbia surpassed the expectations in 2013 totalling 2.5 per cent, and the greatest contribution to such results came from the export increase of 16.6 per cent 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 per cent and 1.5 per cent respectively for the entire year of 2013.

After several months of increase, real salaries dropped in the first two months of 2014 and will...