11. May 2017

EU expects Serbian economy to grow 3.2 percent in 2017

The EU expects Serbia's economic expansion to accelerate, forecasting the country's GDP growth rate to be 3.2 percent in 2017 and 3.6 percent in 2018. In its Spring 2017 Economic Forecast, the European Commission said "robust revenue growth" would support a "further budget deficit reduction", noting Serbia's domestic demand was "picking up, boosting imports and government revenues." "Economic growth is forecast to accelerate and to be increasingly driven by private consumption. Continued gains in employment and higher income, in particular in the private sector, together with increasing consumer lending and the preservation of the overall macroeconomic stability should underpin the envisaged strong rebound in household consumption," the report said. "Investment growth is expected to remain broadly unchanged, benefiting from FDI inflows and higher government capital expenditure. Nevertheless, the level of gross fixed capital formation would remain rather low at below 20 percent of GDP," the EC predicted. Public consumption is likely to contribute positively to growth as government employment stabilizes and expenditure on goods and services increases. Driven by rising demand in the EU, Serbia’s main export market, exports are forecast to remain robust. They are likely to be supported by incoming foreign direct investment in tradable sectors and productivity gains as a result of domestic reforms," the report said. Strong demand is set to push imports up, resulting in a negative contribution to growth from net exports over the forecast horizon, the EC expects. @b92

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