SERBIA Economic Outlook

Nikolay GeorgievDushan Nedeljkovic

OutlineCountry FactsTrends of macroeconomic aggregatesEconomic activity IndicatorsLabor MarketTradeFDIMonetary policy and Exchange RateWages

Country FactsTerritory – 77474 sq kmPopulation – 7.4 million Capital – BelgradeCurrency – Dinar (RSD)Official Language –

SerbianMajor Economic and

Political Reforms – 2000Natural resources – oil,

gas, coal, iron ore, copper, zinc, gold, silver, magnesium, limestone, marble, salt, arable land

Trends of macroeconomic aggregatesAverage GDP growth for the period 2002-

2008 is 6.1%Increase in aggregate demandHigh investment and Structural ReformsHigher productivity and increased efficiency

due to privatizationPositive financial results of RSD 108 billion in

2006Still recovering from the slump in 1990s

Economic activity Indicators

Labor MarketIn the period 2001-2008 employment level

fallsIncrease in the employment in the private

sector but downsizing of the Stated-owned enterprises

Unemployment remained high (around 21%) but decreases in 2007 and 2008 18.8% and 14.7% respectively

TradeMajor trade partners – Austria, Russia, Germany,

Italy, Bosnia, Romania, BulgariaMain imports are fuel, capital goods and transport

equipment, main exports – manufacturing goods, food, transport equipment, machinery

In the period 2001-2007 exports increased dramatically due to increase of aggregate demand.

Imports grew even faster due to the same reason plus the effect of the appreciation of the RSD

Trade deficit increase from 20.8% of the GDP in 2005 to 22.8% of the GDP in 2007

CA deficit also increased from 10.0% of the GDP in 2005 to 14.7% of the GDP in 2007

Foreign Direct InvestmentIn the period 2005-2007 Serbia’s capital

balance increased significantly due to the great amount of FDI – EUR 6.3 billions

In 2008 – decrease in FDI

Monetary policy and Exchange RateDue to the high

inflation the NBS had to impose restrictive monetary policy in the period 2005 - 2007

The dinar euro XR increased in real terms by 20.5%

As a result in 2008 inflation was 6.8%

WagesAverage net wages grew in the period 2001 –

2008 reaching 32,746 RSD (EUR 347) in 2008.

Wage growth, especially in the public sector, combined with local currency appreciation, brought about to an increase of unit costs of labor and lower competitiveness of the economy.

•http://www.mfin.sr.gov.yu/•http://www.mfin.sr.gov.yu/eng/2742/•http://www.mfin.sr.gov.yu/eng/3041/•http://www.nbs.rs/internet/english/30/index.html