wiiw Current Analyses and Forecasts
Serbia: Slow recovery with depreciation
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in: Will Exports Prevail over Austerity?
wiiw Current Analyses and Forecasts No. 6, July 2010 , pp. 120-122
In Serbia, prospects point to a slow rate of recovery mostly driven by improvements in the trade balance.
That, however, has its limits because the tradable sector is rather small and, given declining investments, export capacity in the short term, it also has its limits.
The government intends to sell Telecom and invest the money in infrastructure in the hope that this will lead to a rise in foreign investments in the tradable sector.
As wages are quite low in euro terms, better and cheaper access to external markets could support a speed-up in growth.
The risk, however, is that the pressure to support current consumption may lead to revenue from privatization being spent rather than invested.
In any event, slow recovery, if not stagnation, over the medium term seems the most probable outlook.
That, however, has its limits because the tradable sector is rather small and, given declining investments, export capacity in the short term, it also has its limits.
The government intends to sell Telecom and invest the money in infrastructure in the hope that this will lead to a rise in foreign investments in the tradable sector.
As wages are quite low in euro terms, better and cheaper access to external markets could support a speed-up in growth.
The risk, however, is that the pressure to support current consumption may lead to revenue from privatization being spent rather than invested.
In any event, slow recovery, if not stagnation, over the medium term seems the most probable outlook.
Reference to wiiw databases: wiiw Annual Database, wiiw Monthly Database
Countries covered: SEE, Serbia