Serbia’s economic growth accelerated in the second half of 2019, fuelled by construction of a pipeline to ship Russian gas via Turkey and Bulgaria, as well as higher public and private spending as the nation heads into an election year.
Full-year expansion reached 4%, Miladin Kovacevic, head of the Statistics Office told reporters yesterday.
“That’s an estimate that exceeds earlier projections of 3.5%,” Miladin Kovacevic, the head of Statistics Office told reporters in Belgrade.
“So we are wrapping up the year with higher growth, with contributions from all important segments including construction, agriculture and services, making this year exceptional.” The government sees full-year growth next year at 4%. Construction works increased by 28.5% in 2019, almost double its 2018 expansion, Kovacevic said.
A Serbian-Russian joint venture said last week that it had completed laying 403km (250 miles) of pipes across the country from its border with Bulgaria to its northern neighbour Hungary.
It will hook into the Turkstream gas link, opening a new route for the country to import Russian gas, bypassing Ukraine, when Bulgaria finishes its section next year.
The statistics office’s full-year 2019 growth estimate also beat the central bank’s upgraded forecast of 3.6% and comes as President Aleksandar Vucictries to convince voters that Serbia is making significant economic progress ahead of elections in the second quarter, even as his party faces criticism from the opposition for deteriorating standards of democracy and for alleged involvement in high-profile corruption affairs.
Vucic presented a five-year economic growth agenda on Saturday, pledging investments of almost €14bn ($15.6bn) in infrastructure, environmental cleanup and demographic improvements, seeking to raise annual growth to 7%. That would help the country double its income in a decade and catch up faster with the European Union, which it wants to join.
For 2020, “we anticipate a somewhat looser fiscal stance due to the electoral context,” said Valentin Tataru, Bucharest-based economist at ING Bank NV, before the results were published.
The economy remains smaller than in 1990, the last year before the bloody breakup of the former Yugoslavia, according to a World Bank report earlier this month.
The economies of Serbia’s central and eastern European peers are now on average 80% larger.
The government is allocating money for housing subsidies for young families to help shore up falling birth rates.
It’s also offering incentives for employers to hire and to spur some of the hundreds of thousands of people who left the country in the past decade to return home and set up businesses.
“We are doing this because we want young people to stay here, to have more children and a better future,” Vucic told reporters in Belgrade.
Growth this year will reach 4%, beating forecasts, while the dinar will be stable in coming years in a range “from 117 to 120” dinars to the euro, he said.
Vucic pledged to raise average wages to more than 500 euros a month as soon as 2020 and 900 euros in 2025, as public sector pay increases and the rising number of manufacturing and construction jobs ends the current labour shortage.
The central bank also plans to help the economy by managing the dinar exchange rate.
The president’s party is riding high in opinion polls despite multiple allegations of high-level corruption and as opposition politicians cry foul over deteriorating standards of democracy, media freedom and the rule of law.
Another challenge he faces is a potential deal to recognise Kosovo’s 2008 secession.
Most Serbs oppose an agreement that would acknowledge the loss of what they consider their historic heartland.
To help raise average annual growth to 7% from about 3.5% this year, the World Bank advised Serbia to expand access to financing for startups and small- and medium-sized firms, revise school programs to enhance job skills, refrain from anti-competition measures and improve services for the population.
Only half of Serbian citizens are satisfied with government services now, a similar level to Central Asian countries, according to the lender’s report.
Serbia also needs to deepen financial sector reforms, improve labour skills, strengthen competition and make its government more effective, according to the World Bank.
That level of expansion, if sustained over a decade, could help Serbia catch up with some EU countries, the international lender said.
The spending spree will be financed mostly by bond sales, along with funds from the budget and bilateral loans.
It will also include a maiden green bond as Serbia targets pollution, among the costliest requirements on its path to the EU, Finance Minister Sinisa Mali said in an interview this week.
from Gulf Times https://ift.tt/37kJJN4
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