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Just three months before the end of the year marked by the biggest economic crisis since the Great Depression, the quite different estimates of GDP growth for this year come from different sides.
Photo: Aleksandar RoknićThe day before yesterday, the Ministry of Finance and the National Bank of Serbia revised their estimate to minus one percent. On the same day, the European Bank for Reconstruction and Development published its growth forecasts for 2020, which are not even close to optimism. Forecasts worsened for most countries, while leaving an estimate for Serbia from May, according to which the decline will be 3.5 percent. A few days ago, the specialized macroeconomic publication Quarterly Monitor also maintained the estimate of a fall of three percent, while a few weeks earlier, the macroeconomic team of Erste Bank estimated the fall at one percent. This difference is not negligible and with a GDP of 40,000 million euros it amounts to about 1,000 million euros.
Sasa Djogovic, author of Macroeconomic Trends in Serbia, points out that 2.5 percentage points is a pretty big difference in the assessment, especially since we are in a quarter at the end of the year.
“My previous estimate is a drop of three percent, but due to a better type of agriculture, I revised the estimate that GDP will fall slightly below three percent.” The biggest uncertainty is what will happen to construction in the fourth quarter, since last year the construction of the gas pipeline contributed to the great growth of this area, and on the other hand, this year some other works were opened, such as the Kuzmin-Raca highway and the Moravian corridor. Although, after the covida, I expect further growth in the construction industry, “says Đogović.
According to him, everything in Serbia has come true and everything has been relativized.
“I don’t know where the Finance Ministry and the NBS see a drop between one and zero percent. Now we have seen that it turned out that the crisis staff made decisions on measures based on inaccurate data. They cannot move forward based on analysis and data. false. With us everything is exaggerated, we are the best in everything, leaders. Even today, we do not know how Air Serbia repaid the loan. They say it is from their own resources. All that remains is to trust our ingenuity and common sense. ” Even now, we can believe in one of the two forecasts, the EBRD or the government, “says Djogovic.
According to EBRD estimates, GDP in the Western Balkans will fall by 5.1 percent in 2020, mainly due to the collapse of tourism in Albania and Montenegro, which is attributed to a fall of nine percent. The fall in industrial production, the reduction in foreign direct investment and remittances will also have an impact. For Serbia, it is estimated that from January to May, the decline in remittances is 30% compared to last year.
On the other hand, the government based its optimistic forecast on the industry’s year-on-year growth in August of 4.2 percent and a record agricultural yield.
According to EBRD estimates, among Central, Eastern and Southern European countries, Lithuania will perform the best in 2020 with a drop of two percent, followed by Poland and Serbia with minus 3.5 percent. Interestingly, the EBRD significantly lowered recovery rates in the coming year for the entire region from 4.8 to 3.6 percent. For Serbia, the estimate was lowered from six to three percent due to uncertainty about next year’s pandemic.
Recent GDP growth projections
EBRD -3.5%
Erste banka -1%
Vlada i NBS -1%
Quarterly monitoring -3%
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