EBRD: Serbian GDP to Decline by 3.5% This Year, Slight Recovery in 2021

Serbia's GDP is expected to decline by 3.5% in 2020, recovering by 3% in 2021, according to the new economic forecast of the European Bank for Reconstruction and Development (EBRD) in the light of the impact of the coronavirus pandemic in the countries of the region.

According to the report, 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.

They remind that GDP growth was strong in the first quarter of 2020, at 5% year-on-year, driven by consumption, government expenditure and investment.

At the same time, exports growth softened to 3.1% year-on-year, the slowest quarterly rate since 2014.

The EBRD reminds that the second quarter of 2020 saw a fall in economic activity of 6.5% year-on-year on the back of stringent lockdown measures, bringing overall growth in the first half of 2020 to -0.9% year-on-year.

They remind that FDI and workers’ remittances both fell by about one-quarter year-on-year in the first half of the year.

Between March and June 2020, the National Bank of Serbia lowered the key policy rate by a cumulative 100 basis points, to a historical low of 1.25%, the EBRD report says.

The central bank also intervened in the foreign exchange market, with net sales of EUR 1.4 billion in the first seven months of 2020. The exchange rate against euro has remained stable.

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% of GDP by mid-2020, around five percentage points higher than at the end of 2019.

EBRD Evropska banka za obnovu i razvoj Beograd

Narodna banka Srbije Beograd

EBRD

National Bank of Serbia

preservation of employment rate

increase of companies liquidity

public debt

GDP

public debt growth

coronavirus