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Government price controls seem to be succeeding in partially taming inflation, which reached 10.4% in May, the second-lowest level in the Western Balkan region. Before the introduction of government controls, in November 2021, it had been 7.5%, the highest in the region. Despite the inflation real incomes are still growing, driven by the increases in the minimum wage and in public-sector wages introduced at the beginning of the year. This is keeping the economy afloat, and GDP grew by 4.4% year on year in Q1, which, although perhaps a slowdown vis-à-vis the previous year, is still decent. Q2 started on a similar note – both industrial production and retail trade grew in April (in real terms). The central bank raised its interest rate to 2.5% in June, for the third time in three months (until April it had been 1%), which may slow down the economy a bit, though not excessively, as real interest rates remain deeply negative. All in all, the economic situation in the country remains as projected in spring, so we keep our forecasts mostly unchanged, expecting GDP to grow by 3.6% for the whole year and inflation to average 10%.
        FORECAST*
Main Economic Indicators201920202021202220232024
Population, 1000 persons694568996850...
GDP, real change in %4.3-0.97.43.63.43.4
GDP per capita (EUR at PPP)128001276014130...
Gross industrial production, real change in %0.30.46.4...
Unemployment rate - LFS, in %, average10.49.011.010.510.09.5
Average gross monthly wages, EUR643706772...
Consumer prices, % p.a.1.71.64.110.06.04.0
Fiscal balance in % of GDP-0.2-8.1-4.1-4.0-3.5-3.0
Public debt in % of GDP52.857.857.1...
Current account in % of GDP-6.9-4.1-4.4-10.0-7.0-7.0
FDI inflow, EUR m381530393863...
Gross external debt in % of GDP61.465.868.5...


Basic data are continuously updated.

* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.

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Monthly Report No. 7-8/2022

Vasily Astrov, Alexandra Bykova, Rumen Dobrinsky, Selena Duraković, Richard Grieveson, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Sebastian Leitner, Isilda Mara, Bernhard Moshammer, Olga Pindyuk, Sandor Richter, Bernd Christoph Ströhm, Maryna Tverdostup, Nina Vujanović, Zuzana Zavarská and Adam Żurawski
wiiw Monthly Report No. 7-8, July-August 2022
58 pages including 4 Tables and 21 Figures

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Executive summary

Vasily Astrov
in: Overshadowed by War and Sanctions
wiiw Forecast Report No. Spring 2022, April 2022 , pp. I-VII
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