Erste Group projects 3.1% growth of GDP of Serbia in 2017

Erste group has projected the growth of the gross domestic product of Serbia of 3.1% in 2017, as well as a drop in public debt to 69.4% of GDP. In the March edition of the Serbia – Macroperspective report, the analysts of Erste Group project that the 2017 annual inflation would amount to 2.4%, remaining within the target range of the National Bank of Serbia. They expect further reduction of the fiscal deficit to 1.2% of GDP.

The document says that Serbia's last year's economic results have exceeded expectations and that the internal and external stability indices have shown considerable improvement. They remind that last year's GDP growth was 2.8%, considerably above their initial projections of around 1.5%, that the employment rate grew in the first three quarters to 45.2% and that good export results influenced the reduction of the trade deficit, which is estimated at around 10.7% of GDP.

– Tax revenues inflow, which has exceeded expectations, various non-tax one-off revenues and slightly lower than planned budget expenditures have led to a considerable reduction of the fiscal deficit to around 1.4% of GDP, compared to the initially planned 4% of GDP and 2.1% of GDP following the review by the International Monetary Fund (IMF) – says the analysis by Erste Group.

As added, the lowered deficit has led to the stabilization of the public debt, which is estimated at below 74% of GDP, compared to 74.7% of GDP in 2015.

– We predict that the positive trends will continue in 2017, with the trend of growth mostly supported by the growth of local demand, whereas net export results might be more neutral – the finance group says and estimates that the 2017 GDP growth will amount to 3.1%.

The analysts of Erste Group project a growth of 2.5% in personal consumption in Serbia in 2017. The consumption trend, according to their estimates, should be supported by improvements in the labor market, an increase in salaries, a further growth of consumer loans and a better overall economic sentiment.

Erste Bank a.d. Novi Sad

Međunarodni monetarni fond-MMF Beograd

Narodna banka Srbije Beograd

macroeconomy

inflation

export

GDP

gross domestic product

fiscal deficit

International Monetary Fund

IMF